With listing inventory at millennium lows (-25.3% vs 2017 and -42.5% below 2016 levels at year end 2018) it is more important than ever for Ottawa buyers to have a strong team in place and a plan for success in 2019.
Have an updated plan:
Make sure you have a plan and update it, if one is up to date with everyone on your buying team then a purchase will definitely go more smoothly with fewer surprises:
Here are just a few things to do to be ready for that dream home:
If you have been looking for a home for a while, it is also a good idea to revisit and update your plan.
-check with your mortgage broker to make sure there is no change in your prequalification level or mortgage rate and see if you can get a rate hold guarantee
-review with your mortgage broker whether a fixed or variable rate is best for you. 70% of mortgages are still fixed rate but variable has been most advantageous over the long run. Understand the pros and cons for each and plan based on what works for your circumstances.
-speak with your lawyers office and make sure you are up to date on all fees, and other disbursements the lawyer will make on your behalf, including land transfer tax (LTT), title insurance, mortgage insurance (if less than 20% down)
-check with your insurance broker, so you know what information they will require to provide appropriate insurance coverage and if there are any potential issues with a property under consideration.
If you have not been successful in finding an appropriate property, do you need to bump your price search range up to a higher level?
Focus on specific housing type:
Have you evaluated all options in potential housing and narrowed down your criteria to those that suit best? There is an old saying that home buying is as much a matter of elimination as it is of selection and this is quite true. The more one can focus on the type of house they are looking for within their financial plan, the better
-do you need to add to or subtract from your geographical area of search? Again, the more focused one is on a particular area or region, the easier it is to stay on top of new listings.
Are partners on the same page?
Being one the same page with a spouse or partner is critical in a successful home purchase. If there are differences of opinion, try to get these ironed out before you start seeing homes and making offers. If priorities are too far apart, getting a successful deal done will be painful.
Do you have your buying team in place and up to date?
Do you have a mortgage broker? Realtor? Lawyer? Inspectors? Does your financial planner need to be in the loop? Are they all available right now if your dream home gets listed tomorrow?
How are you funding the down payment and deposit?
First time buyers will want to review this, especially if these funds are coming from an RSP or TFSA. Typical deposit on a deal is about 1% of purchase, so $3,000-$5,000 paid at time of sales agreement for the average priced property. Buyers may wish to offer more though, if they feel it adds strength to your offer, particularly in potential multiple offer situations.
Builder new home deposits are much higher, generally in the 10% of purchase price range, although buyers will have about 60 days to provide these funds in installment payments.
New construction vs resale:
If you are considering a new construction purchase, please make sure your Realtor knows, as they can help immensely in co-ordinating visits and providing advice on lot selection, features, upgrades and builder recommendations. Realtors are involved in 85-90% of resale transactions but probably only 25%-30% (or less) of new construction transactions, so many of these buyers are purchasing without anyone directly representing them. (…kind of like going to court without a lawyer…)
Multiple offers and bully offers?
Have a strategy for dealing with multiple offers or “bully” offers.
With our low listing inventory environment, these types of situations occur more frequently, especially for those shopping in the $250-$500K range. Understanding how these work and determining if and how you will participate, is good to discuss in advance.
Be an ‘active” buyer:
-keep an eye out for new For Sale signs in your area of interest. Especially look for those that say “coming soon…” or “Exclusive Listing” as these will not immediately appear on MLS® and may even be sold prior to an MLS® public listing being posted. Give your realtor the name of the listing agent and the address of the property and they can follow up for you and get you in to see the property.
Ditto, watch for online postings in facebook groups or kijiji or other online real estate sites that may show listings that have not yet made it to MLS®. Some buyers and agents are advertising future availability, too and while these can be tricky and not that often successful, they may well could be an opportunity.
Be aggressive and decisive: don’t fret overpaying
Don’t wait for an open house, try to get in to see a newly listed property as soon as possible.
If you have a good market knowledge and see a property that ticks all your boxes, be ready to make a decision and go for it. Many buyers can be a little nervous about overpaying but remember that if our upward market continues, this property is likely to be worth $20-$30K more next year and you want to get in to the market as soon as possible. Your Realtor will help guide you in appropriate pricing strategy.
2019 is expected to be another challenging year for buyers, so have a good plan and work closely with your Realtor for success this year. If you do not already have a Realtor, we strongly suggest you engage one now to improve your chances in finding and securing your dream property this year.
We would be happy to discuss if our approach and philosophy is appropriate for you, if you would like to discuss, please give us a call at 613-435-4692 or check us out at oasisrealtyottawa.com or our facebook or twitter platforms @oasisrealtyOTT or https://www.facebook.com/oasisrealtyottawa/
Gord McCormick, Broker of Record
Dawn Davey, Broker Oasis Realty Brokerage