The Toronto market is not kind to Buyers these days, and getting a house – let alone getting the house you want – isn’t easy. Here are our time-tested and BREL-approved strategies:
Be Ready: the Bidding War
Chances are, you’re going to find yourself in a bidding war. That’s just reality if you’re looking for a house in Toronto. Accept it. And be prepared:
- Take care of your conditions before the offer – that means getting comfort from your bank that you can get financing (for that particular house) and doing a home inspection before the offer
- Have your deposit cheque ready to be submitted at the same time as your offer
- Meet the Seller’s closing date and other terms they want
- Go in with your best offer – you may not get a second chance to improve it
- Show up to the offer presentation – you may need to make changes to it and being able to respond quickly is key
- Read our Bidding War Strategies blog!
Remember, when in a bidding war: the price of the next house will be based on the price you weren’t willing to pay for this house. For example, a house is listed at $799,000; you bid $900,000; it sells for $950,000. The next similar house in the neighbourhood will now have a baseline price of $950,000, so it very well may sell for $975K, $1 million or more.
Also to keep in mind: When you look at past sales, remember that they are PAST sales. In an increasing market like we have in Toronto right now, you need to adjust your price UP from the last sale. With detached house prices going up an average of $8,500 a month, even a sale from a few months ago needs to be significantly adjusted.
Speed is the name of the game in Toronto real estate. Make sure you are getting listings from your agent as soon as they are listed – not the day after they are listed. Every REALTOR has the ability to send you instant listings via a system called Collab – just ask them to set you up on it. Tour good houses right away – waiting until the weekend might mean your dream house gets bought by someone else. Have your financing in order and your deposit liquid so you can make a quick move. See it, like it, buy it. (ok, there’s a lot of due diligence that you and your realtor will have to do in between the ‘like’ and ‘buy’ steps, but it can be done quickly).
Consider Being a Bully
Many Toronto Sellers try to control the offer process by having an offer date (for example, they might say: No offers until Wednesday at 7 pm’). Their goal is to get as many people in to see the property as possible in the hopes of generating a bidding war. A bully offer is an aggressive offer that’s made before the bidding war date – it’s significantly above asking and usually has a very short time frame for the Seller to respond. The key to making a successful bully offer is that the Seller needs to believe that your offer is higher than what they would get on offer night (and they need to believe you won’t be there to make this offer again on offer night). A bully offer might mean that you pay more than you would in a bidding war, so this strategy is more about ensuring you get the house, rather than getting a deal. [Related: All About Bully Offers]
Be Ready to Respond to a Bully
While you might not want to trigger a bully offer yourself, another Buyer may very well choose to. If a bully offer is registered on a property you saw, your real estate agent will be informed, and you’ll have a chance to compete. Keep in mind that the timelines are usually extremely short, so you may only have an hour or two to decide how much to bid and put the offer together. Be prepared. If you find a house you want to make an offer on, let your realtor know right away – that way, they can do the comparable price analysis and prepare the paperwork so that you’re ready if you need to respond to a bully offer.
Shocker: not all houses sell in bidding wars. We track the good houses that don’t have offer dates or didn’t get offers on offer night – sign up for our weekly list here!
Be Ready to Compromise
No matter your price point, everybody has to compromise. It’s a natural human tendency to want to get a $1.3 million house for $1 million – we see it all the time. But aligning your wants, needs and budget to the current market reality is the only way you’ll find a house. [Related: Ugh, Buyers, It’s Time for Compromise]
The two hottest commodities in Toronto right now are the fully renovated house and the house that needs to be gutted. Somewhere in between the two lies the ugly house – the one that hasn’t been cosmetically updated, has a quirky floor plan or lacks curb appeal. These are all things that can be fixed, though many Buyers lack the ability to imagine what a house would look like without that 70’s kitchen or flowered wallpaper. Opportunity!
It’s also worth mentioning the gross house…the one that hasn’t been cleaned in forever and smells bad. Sure, you’ll want to do a little extra due diligence to make sure they haven’t neglected basic home maintenance too, but many Buyers walk right out of the gross houses and don’t even give them a chance.
HGTV: thanks for keeping demand for ugly and gross houses low!
Screw Negotiation, This is About Strategy
If you’re buying a house in a hot neighbourhood, chances are you’ll be competing with other Buyers…and the key to getting what you want is strategy, not negotiation. And if you’re lucky enough to be the only bidder, your agent will still need to be creatively strategic to land you the home of your dreams.
Choose Your Real Estate Agent Wisely
Experience matters. An agent who sells a lot of houses will not only make sure you don’t buy the wrong house; they’ll have a deep understanding of what it takes to get you the house you want. Look for an agent who is well-known and respected among the realtor community – that often gives our Buyers the edge. [Related: 10 Big Questions to Ask Before Hiring a Buyer Agent]
If you’re looking to buy this fall, get in touch – we’d love to help you get the house you want!