Whether you’re a first-time homebuyer or veteran investor, the process of locating and buying a property isn’t always an easy task. What can compound matters is attempting to buy a home in a strong sellers’ market – the current reality for many parts of Canada, particularly in the Great Toronto Area.
So then, how do we navigate the buying process when we’re up against strong buyer competition?
1. Educate yourself
Before going out to view your first home, talk with your Realtor and other expert sources to learn as much as you can about the market you’re buying in. If you’re investing, understand what is currently driving the market demand, current inventory, how fast homes are selling, list versus sell price, frequency of multiple offers, and rental-related information.
2. Have your finances in order
Whether we like it or not, if you end up in a competitive multiple offer situation there may be pressure for you to exclude certain conditions, such as mortgage financing and home inspection. In these situations, it is imperative that you have the utmost confidence that you’ll be approved for a mortgage for the home you’re trying to purchase.
Also, be sure not to make any major financial changes prior to closing (e.g. taking on more debt, leaving a job, etc). Firming up a deal without obtaining mortgage approval prior to closing is a recipe for a potential lawsuit – at minimum you could lose your deposit.
3. Know how to recognize certain home defects
As with the above point, multiple offer situations may require you to exclude a home inspection condition. Therefore, it is important that you do your homework on what to look for regarding potential defects in a home (e.g. water issues, foundation issues, proper construction, fire hazards, etc). Preferably you bring someone with you during showings who has this background.
4. Remove emotion
Purchasing a home in a hot market may mean that you will lose during negotiations. It’s not uncommon for some buyers to have to put in offers on a few homes (at different times of course!) before they actually get an accepted offer. Attaching too much emotion prior to a firm deal can lead to a feeling of disappointment and frustration in the event an offer is lost.