Tips for preparing to buy or sell a home in a busy market
In a busy real estate market, homes are bought and sold at a faster pace than usual. What would usually take a few months to sell may be purchased in a matter of days or weeks. This creates a sense of urgency where buyers pay more than they can reasonably afford, and sellers want a price higher than they would normally receive.
You can avoid the pitfalls of this kind of market by preparing ahead so your expectations are realistic. Taking the time to do this could save you money and frustration.
Take a step back
Before you start the buying or selling process, take time to think about what lies ahead. Make sure you ask yourself:
- Why are you moving?
- Does it make sense for your family and lifestyle?
- Is it feasible with your current finances and career?
Communicate clearly
Be open with your REALTOR® and specify what you’d like to accomplish. They have the expertise and resources to draw from and to help you achieve realistic goals. They’re also required to meet confidentiality standards.
Ask for blank standard forms
There’ll be a number of contracts to sign when you agree to work with a Realtor. Knowing what to expect ahead of time allows you to make more informed decisions when things start to move quickly. Ask for blank copies of these forms:
- purchase and sale contract,
- listing contract, and
- buyer agency contract.
Read them thoroughly and ask your Realtor to explain terms or clauses that are unclear..
Buyers
1. Calculate how much can you afford
Be honest and realistic about the amount you can afford to pay and stick to it. Multiple offer situations can create an overwhelming sense of urgency that could result in paying more than you intended.
2. Include other buying costs
You’re paying for more than the sale price. Make sure to include other buying costs such as the Property Transfer Tax, property tax adjustments, legal fees, and more.
3. Get your finances in order
This is a critical step. Make sure the money for your deposit and down payment is easily accessible. If you intend to use a non-liquid asset, sell it first so you have the cash when you need it. A busy market won’t wait for you. If you have a lower credit rating it’ll be harder or more expensive to get a mortgage, so pay down your debts first. Contact a credit counsellor for advice.
4. Must-haves vs wants
Now that you know how much you can afford, it’s time to be clear on what you’re buying. Make a list of must-haves and nice-to-haves for your new home. Again, be honest and see which of your must-haves can be relabelled nice-to-haves. Doing this may increase the number of potential homes you can view and possibly reduce the amount you pay.
5. Determine time frame for buying
Let your Realtor know ahead of time how much time you have to search for a home. If you only have a couple of days, they can arrange multiple in-person viewings at a time (only when it’s safe to do so). Be sure to vet homes ahead of time using online tools like pictures, 3D “dollhouse” layout views, floorplans, and virtual tours. If possible, drive around and look at the homes beforehand.
Sellers
1. Be realistic
In a busy market it’s tempting to expect a quick sale and an over-asking bonus. Don’t let stories of homes selling for hundreds of thousands more than the list price cloud your judgement.
2. Discuss marketing strategies
Your Realtor has extensive expertise resources from which they create a plan to sell your home. Ask for a copy of the marketing plan, including how often they'll update you on the selling process. Be sure to read all the documentation.
3. Listing price
Your Realtor will undertake a comprehensive market analysis to arrive at a listing price. Ask for a copy of the analysis. If you want to list at a significantly higher price, step back and reconsider their advice. You could risk becoming a 'before' home. This is the property Realtors show their clients to illustrate properties they think are over-priced. Afterwards, these buyers are taken to other, more reasonably priced homes. These homes will likely sell first.
4. Get your home in shape
Buyers want to imagine their belongings in your home. You can help increase its appeal by decluttering your home, balcony, garage, and garden, and remove what you’ve cleared off-site. It's a good idea to remove all your photos and personal items.
5. Selling costs
There are other costs to selling a home in addition to the sales commission. You may have a mortgage payout penalty, property tax adjustments, legal fees, and moving costs to include.