Montreal’s real estate market was recently ranked one of the hottest seller’s markets, which means the city’s housing prices and market conditions swing strongly in the favour of sellers. In a seller’s market, bidding wars become increasingly common, and buyers could easily end up paying far more than they had anticipated on a home or rental property.
Buying in a hot housing market is sometimes inevitable, but there are ways buyers can avoid overpaying for real estate. These tips will steer you away from common buyer mistakes, and will save you time and money when shopping for a property.
1. Work With A Clear and Rigorous Budget
There are two types of budgets to consider when deciding how much home you can afford. The first is your loan capacity, which will be determined by your bank based on your salary and income-to-debt ratio. Don’t start your home hunt without a mortgage pre-approval in hand, as proving your financial capacity is essential when presenting an offer in a hot market.
Next, you will need to calculate your closing costs – the buying fees and deposit amount required when purchasing a home. These include your:
- Mortgage downpayment
- Notary fees
- Property, land transfer and school taxes.
- Inspection fees
- Moving costs
- Renovation costs
Work with a conservative estimate to avoid stressful surprises once your offer has been accepted. Once you have determined your upper budget, agree to stick firmly to it – even in the face of competition.
2. Avoid acting out of desperation
After losing a bidding war or two (which is quite common in a seller’s market) it’s hard not to overbid out of desperation. Impulsive, emotional decisions have no place in a home-buying transaction, and it will require restraint to stick to your numbers and buying criteria.
Stay realistic about market value by keeping your eyes on new listings, which you can monitor through a Centris property alert.
Once you have determined your negotiable and non-negotiable criteria, communicate your requirements clearly to your real estate broker. They will help you remain objective when and if the pressure sets in.
3. Act Quickly
In a seller’s market, homes sell fast and hot deals sell even faster. To compete, you’ll have to notice listings as soon as they are published for sale, and request a visit as soon as possible.
Before you walk into a visit or open house. make sure your paperwork is up to date and that your mortgage pre-approval is still valid.
4. Hunt for overlooked market opportunities
It is possible to find BMV properties – homes or condos for sale under market value – in a seller’s market, providing you know where to look.
Ask your real estate broker to pull up a list of:
- Properties that have been sitting on the market for a while. Unsold properties may need more renovation, or might have been marketed poorly by the seller (dark photographs, incomplete information, etc). These are ripe for a good deal, as the sellers are more likely to accept an offer based on municipal evaluation rather than heated market value.
- Repossessed properties.
- Off-market listings. Most real estate brokers have a list of private sellers, or sellers who have previously tried and failed to sell. Browsing off-market listings will allow you to avoid bidding wars and competition from other buyers.
- Subscribe to an investor’s mailing list. Our investor’s mailing list sends out weekly notifications about newly listed BMV properties.
- Open your search up to emerging, pre-developed markets such HOMA and Ville Émard.