3 lessons from a real estate cold

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The bidding wars may be behind us, but what have we learned from them?

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The housing market in Canada is cooling. Home sales between March and April fell 12.6%, according to recent data from the Canadian Real Estate Association (CREA).

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While home prices may not have seen such a significant drop, demand for homes appears to be cooling nationwide. If you are looking to sell your home, it is important to consider the impact the new market will have on you.

Selling in a buyer’s market

When thinking about selling your home, it’s invaluable to think of the process as a business transaction. You have a product, your home, that you are selling to a customer. It is important to anticipate the wants, needs and desires of the customer and market your product accordingly.

Bradley Watson, host of Toronto’s #1 Real Estate Podcast and a broker and investor in the Greater Toronto Area, notes that “very quickly people forgot that there are markets where you actually have to market your home properly, and stage it, and be patient for the right buyer.” .

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At the same time, you need to think about why you are selling your home. Are you selling to reduce your living space? Moving out of town? Are you planning to make a profit on your home?

Because the market has changed, potential buyers hold more power than they did in recent history. If you are selling your home for a profit, you may want to reconsider your motives.

“What we forget and almost want not to think about is how hard it will be to buy on the other side,” Watson says.

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A few months ago, you may have seen multiple offers on a property and managed to sell well above the asking price. Now, the current landscape is quite different. With rising interest rates, buyers are more cautious in their approach to home buying.

“Sellers kind of come to realize that they can’t guarantee a sale,” says Watson.

1. Timing isn’t everything

Timing the real estate market is a gamble. Anticipating market trends is like playing the lottery: yes, there will be winners, but they will be few.

If you’re considering selling a home, don’t make profit your main motivation. Sell ​​based on your personal needs, and if you happen to make money, consider that a bonus.

“We have people who are committed to buying new build, buying properties with confidence to sell, who are now having a bit of a hard time,” Watson says. “And we’re even seeing people selling, again, homes for less than they paid, probably because of this affordability challenge.”

Trying to gamble in the real estate market can lead to further disappointment and frustration, especially if you bought a new home before selling your current one.

When the market was hot, Watson saw “the confidence to be able to buy wasn’t there but the confidence to sell was and that caused people to do something which is in my mind the no-go zone, which is d buy before you sell without confidence in your finances.

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With the market cooling, homes are staying on the market longer and selling for less than before. Buying a new, more expensive home before selling yours may mean you have to take out two mortgages for a while or frustrate the financing of the new home.

“Have a game plan in place for how you’re going to close this property in case we can’t sell your house,” says Watson.

Having a clear value for your home and pricing it accordingly can save you some headaches. When trying to sell your home in a down market, don’t expect to receive multiple offers or to sell above the asking price.

Watson observes that when selling a home, it’s important for sellers to be aware that issues can arise when closing a sale.

“Really understanding the financial strength of the buyer is more important than ever right now. This can therefore prevent having a good fat deposit. But also understand financial strength”

2. Change your expectations

If you are selling your home, you need to consider the changing attitude towards home sales. While the demand is still there, real estate agents have witnessed a distinct shift in the market.

It’s no longer their lineups to view homes and extreme bidding wars over homes. Instead, there seems to be some stabilization.

Sellers are seeing fewer offers, with far from the asking prices above.

“It’s just about adapting to change,” Watson notes. ” Grateful [that] in a balanced market, you don’t see much price growth, do you? So where you might have seen your neighbor selling $100 or $200 [thousand] in some areas higher up…you can’t expect that because it was the product of a very, very tight seller’s market, which we’re not in anymore.

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3. The value of a home inspection

When the market was hot, there wasn’t much room for negotiation when buying a home.

“In the heat of the market, we’re looking for at least five or 10 multiple offers and no strings attached,” Watson says. “In the hottest areas, we found that the financing conditions had disappeared. Home inspection requirements had all but disappeared.

“I think that [were] lots of properties with issues that have been sold and buyers have just accepted it.

Alan Carson, founder and CEO of home inspection company Caron, Dunlop and Associates, has seen how the housing market affects the rate of home inspections.

“Between COVID-19, low interest rates, panic, bidding wars… demand for home inspections remained high among buyers, but the ability to get a home inspection dropped by dramatically, because it’s a crazy seller’s market,” Carson said.

“Buyers were pressured not to put any conditions in their offer, including for the home inspection,” says Carson.

As a seller, you can use a home inspection to your advantage. Performing a home inspection before you put your home up for sale and including the report for potential buyers allows you to establish a firm price for your home. Because there will be no surprises for the buyer, he has less leeway to negotiate the final price.

Coming out of a buoyant market, it’s important to ask yourself what a more balanced housing market will look like. As you prepare to sell your home, be sure to keep the buyer of the property in mind, as they will ultimately hold more power than they have had in the recent past.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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