There’s no question that the real estate market can change quickly, and nowhere is that more true than in a highly sought-after city like Toronto. A few years ago, every listing got scooped up in a flash, often with competing buyers and multiple offers.
However, nothing lasts forever, and periods of fast market activity are often followed by slower sales and conditions that temporarily lean in favour of buyers. As 2024 unfolds, all expectations are for the market to pick up as the Bank of Canada considers lowering the interest rates.
In any case, the demand for housing in Toronto remains strong and continues to grow as more newcomers set their sights on the city. Already, we’ve seen a significant uptick in sales. The question is how busy the market will get and if we can expect to see bidding wars return to the market. If they do, the tips in this post will help you compete and secure the home you want.
Plan Ahead
Creating a solid plan for success is your best course of action as the market becomes more challenging and competitive. An intricate knowledge of the market and any hidden advantages you may have can help you find the right house while remaining comfortably within your budget.
Your first step is to determine what that budget may be. Consider that you need anywhere between 5 and 20% for your down payment and deposit to qualify for a mortgage. You should also factor in 3 to 5% of the purchase price as closing costs.
Knowing your budget is always essential, but it becomes critically important in the event bidding wars return to Toronto. Accounting for all costs over and above the purchase price will keep your expectations realistic and prevent you from paying too much for your new home.
Insight into the local market will also help. While we don’t recommend trying to time the market, it is helpful to know what you might be up against.
For example, spring is typically one of the busiest months for real estate. More listings may be available, but there will also be competition. If you have equity in an existing home, buying and selling in a busy market can actually be beneficial. If you’re a first-time buyer, you may need to get in while prices are low.
No matter what your situation, an experienced real estate agent can help you determine your advantages and disadvantages in the current market. Under this expert guidance, you can create a buying plan and act when the time is right for you.
Looking for the perfect neighbourhood in Toronto? The posts below can help you choose:
- These Toronto Neighbourhoods are Perfect for a Fresh Start
- Up and Coming Neighbourhoods for Families
- Top Dog-Friendly Neighbourhoods in the West End
The Value of Getting Pre-Approved
When and if bidding wars return, buyers will need every competitive edge possible. Getting pre-approved for a mortgage before looking at homes is a simple step that helps you stand out among competing offers.
Think about the transaction from the seller’s perspective. Earning the highest amount possible may be their top priority, but it’s not the only thing on their minds. They also want reassurance that the buyer can and will close on the transaction, especially if they have committed to purchasing a new home themselves.
A pre-approval shows that you have already qualified for a mortgage, which makes financial issues less likely to cause the transaction to fall through. In addition, it allows you to drop the condition of financing from your offer. If a seller has multiple offers, they will often choose the one with the fewest conditions, even if the dollar amount is slightly less.
Getting a pre-approval is one giant step toward a successful purchase. However, keep these precautions at the back of your mind to ensure a seamless close.
- A pre-approval is not a guarantee. It is an agreement by the bank to lend you the specified amount, provided nothing changes between now and your purchase. Taking out a large loan could alter your credit ceiling and put your approval in jeopardy. Once you get pre-approved, it’s best to avoid any significant life changes until you take possession.
- Be aware of the appraisal amount. Understanding appraisals is critically important if you’re ever in a multiple offer scenario. The bank will only lend you enough for the fair market value of the home. If you offer more than the property is worth, you may find yourself on the hook to come up with those additional funds.
Be Firm but Flexible
As you begin your search, it’s understandable that some items on your wishlist are non-negotiable, even if it does take longer to buy a house. There are other areas where you may need to compromise. Both of these are true in any market, but especially when conditions get competitive.
Knowing what your must-haves and deal breakers are before you begin searching will save a lot of time and energy. It will also keep you grounded in the event that you do face multiple offers. Having a crystal clear point where you will walk away will help you avoid the temptation to overpay for your new home.
Sticking to your guns can also lead you to hidden gem listings where you can get an undervalued property that others overlook. By working with a real estate agent who knows your area, you can often access listings before they reach the open market. In addition, they will keep an eye out for niche neighbourhoods or up-and-coming areas that are great places to live but are currently flying under the radar.
Is now the right time for you to buy? The related resources below can help you create a workable timeline:
- Why Now Is the Time for Toronto Buyers
- Has Buying a Home in Toronto Gotten Easier?
- What You Need To Know About Buying A House In A Changing Market
Be Ready to Negotiate
When the market gets competitive, you may have to offer more money to secure the home you love. Just remember that there can be other ways to appeal to a seller.
Everyone is different, and a little background information about the homeowner and why they are selling can help you negotiate. For example, a longtime homeowner who has raised their family in that home might want to see it go to another young family who will cherish it rather than an investor with multiple properties who will rent it out.
Other times, a flexible closing date might clinch the deal even if the dollar amount is lower. And if you are ever in a position to place unconditional offers, you can stand out among other buyers. These are just a few reasons to plan ahead and do your research in advance.
Having a solid strategy in place while working with a seasoned real estate expert can help you secure the right house on your terms regardless of the market.
Are you ready to begin your search in Toronto? We’d love to help you find the home of your dreams. Contact us today at Erica@EricaReddy.com or call 416.443.0300 to take the next step.
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