Megann  Willson

Megann Willson

Real Estate Agent

HomeLife/Realty One Ltd., Brokerage

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What Happens in Vegas Real Estate, Isn't What Happens in Toronto Real Estate

At least once a week, I get a call from a prospective client, asking if there’s a way to get a deal, even in the current hot housing market. They’re wishing and hoping for a foreclosure, a power of sale, an estate sale, or some other unusual circumstance whereby they can buy a home for less than all the other homes in the area where they want to live. And I’m the one who gets to ask some questions. Frequently I discover they’ve read a book or watched a late-night or Sunday-morning real estate investment show. The show about how the lucky buyers bought a fixer-upper for a song, and with a lick of paint and some sweat equity, they were able to turn it into a maximum-value showstopper. Oh, how I wish. I wish I could buy a property like that, too.

Are there sweet deals out there? Sometimes. You can occasionally get a home for a bit less than the going rate. Usually the seller will have a specific circumstance, like having already bought another property, and you can meet all their other needs, like a perfectly-aligned closing date. But if you’ve watched the scene in House of Gucci where Patrizia Reggiani discovers the counterfeit Gucci bags in the market, you’ll know that if the price seems too good to be true, it is. And in the long run, it can hurt you to buy a house that has a reputation for being “cheap for a reason”. What happens when you go to sell, if the buyer’s agent looks up the history and sees that your place sold for way below the average? Trust me, they’ll share this with their client. In the current sellers’ market, demand is driving prices higher (although there is some evidence of a slight cooling, I’m still seeing most agents holding for offers, and multiple offers coming in – resulting in sales well above the asking price). A recent poll discussed in this Financial Post article says that purchase intent is cooling – but my years in marketing have taught me that buyers’ intent to purchase and what those buyers actually do, don’t always match up. Besides, waning purchase intent may just mean some buyers are tired of trying.

Often prospects and clients ask about foreclosures. You’ve seen those on TV or the internet too, right? Where someone buys a place for a few thousand dollars? Banks don’t work that way here in Canada. First, most of our banks are concentrated into a half dozen or so large institutions, and then a smattering of other lenders. Not only will they not sell a property just to cover what’s left owing on the mortgage; they are legally bound to sell for a reasonable market price. You can read more about that here, in this article on foreclosures and real estate from Yahoo Finance.

Perhaps an opportunity in estate sales, then? Similarly, when the property of someone who has died is being sold, those inheriting (the beneficiaries) usually want to get their money’s worth. They’re often more than willing to wait to get the price they want. So, you might save a little on a property that hasn’t had any updates, but these days even the fixer-uppers are going fast, for a lot of money. And if the person died without a will, your transaction, assuming your offer is accepted, could be tied up in probate for months, or even years. Occasionally a family will be selling the parent’s home because the money is needed to pay for that individual to move into care – but with the average days on market barely in the double digits (11 days, last month), properties are moving fast.

What about something that’s just not selling? Are there properties that take a long time to move, where the seller might be motivated? When I do searches for properties that have been 90+ days on market, often this is what I see: very expensive properties, in the millions of dollars. Some of those are unique, hard-to-price properties, and they take time. For the most part, though, sellers and their agents will work to find the equilibrium price, the one that’s attracting a reasonable number of offers, and they’ll take a price reduction in short order, unless they don’t care whether they sell it now or not. Those sellers, who are just testing the market, may bring a property forward from time to time, just to see if they can also find a “magic number”.

Knowing all that, what’s my advice if your budget won’t stretch to afford a property in the neighbourhood you want? There are some tried-and-true tactics you can employ:

  1. Wait and save. Keep trying to accumulate more of a down payment.
  2. Lower your expectations. Maybe a smaller property in the area will do, just to get your foot in the door and build some equity. Especially if you’re single or a couple with no kids, it’s worth being flexible on this.
  3. Look at adjacent, solid neighbourhoods. Looking at a nearby spot with a similar vibe will increase the chances of getting the benefits you want, with a slightly less (but not miraculous) price tag.
  4. Consider a mortgage helper. Buying a home with a rental unit can help you carry a bit more mortgage than you could otherwise. But beware, income properties will mean that your bank may want to see a larger down payment on your part. 
  5. Get rid of other debts. If you can eliminate a loan payment on a second car, or pay off your student loans or credit cards, you’ll free up space in your budget that will allow you to take on a larger mortgage payment.

Don’t spend time being frustrated, or in trying to change the facts. Accept that this is a very tight market and that miracles are exceedingly rare. Work with your REALTOR™ and listen to their advice. Trust me, they want you to buy a home as much as you do.

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