The Canadian real estate market has been experiencing massive growth since 2020, even when this pandemic has affected the different sectors so drastically. Prices of properties have skyrocketed, with the Toronto Regional Real Estate Board confirming that for the first time ever, the average selling price of houses has crossed $1 million. The board further predicts that by the end of this year, the average price will reach $1.025 million, which was $929,629 in 2020.

So, what is the reason behind such a drastic increase in the prices of properties in Canada? Intending to uplift the economy, the Bank of Canada has lowered the interest rates to 0.25% from 1.25%. This has allowed a many Canadians to enter into the real estate market as they can now borrow more money from banks at reduced rates. On the other hand, the sellers have also increased the selling prices as they want to get the best deals in the market. With this new work from home pandemic culture, people have realized the need for a comfortable living space more than ever before. Moreover, the real estate market in Canada is affected by seasonal changes, with sales soaring during spring and summer. All these factors have resulted in an enormous increase in the demand for affordable homes in the busy cities of Canada. However, the supply is surprisingly very less as compared to the demand. This high demand and low supply is another main reason for the high price.  

If you are thinking of entering into this competition, then here are the 10 most useful tips that will help you to buy a property in Canada’s seller’s market.

1 - Know the market well:  To buy a property in a seller’s market, the first and foremost step is to have a clear idea of the market conditions. In the real estate market, the conditions differ from neighbourhood to neighbourhood thus, if you are planning to buy a house in a specific neighbourhood, get a thorough knowledge about the market conditions there.

2 - Consider multiple properties instead of focusing on only one:  In a seller’s market, there is no such use of the asking price because most often, it is not the price at which the property is sold. Sellers usually under-price their properties to attract more potential buyers and then sell to the buyer who offers the best deal. Therefore, it is important to view more properties so that you can get an idea of the market and can offer the best deal. This will increase your chances of winning the bid. Moreover, considering multiple properties allows you to compare between them and helps you in choosing the ideal home.

3 - Fix your budget:  Before entering into the competition, decide the amount of money you are willing to spend on your new house. Your budget will depend on your lifestyle, the size of your house, and most importantly, the area in which you want to buy your house.

4 - Make a quick offer:  If you are planning to purchase a property in a seller’s market, then you will have to make quick decisions and act promptly. Making such quick offers is known as “bully” offers and it is one of the most effective strategies in a seller’s market. Whenever a house interests you, try to make an offer as soon as possible, even if it is the list price.

5 - Your offer must be unconditional:  In a seller’s market, you may not get a chance to offer multiple times. Thus, to get an advantage over other potential buyers, your offer should not comprise any conditions. A conditional offer is one in which certain terms have to be fulfilled to make the offer valid. Conditional offer can be of three different types:

•          Conditional on financing:  If you are a first-time buyer, you have to arrange for a pre-approved home loan. Sometimes, the lender does not agree to provide the loan, and then you will have to rescind your offer.

•          Conditional on home inspection:  Before buying a new property, it is quite natural to conduct a home inspection to check whether the house is in proper condition. However, such conditions may go against you while making an offer in a seller’s market.

•          Conditional on the selling of previous property:  If you are trying to buy a second house, you may be willing to sell the previous one before purchasing the new property.

6 - Keep a backup plan:  This pandemic has taught us that market conditions can change overnight. Therefore, it is always safe to prepare a backup plan. 

7 - Hire a professional real estate agent:  Hiring an experienced real estate agent can be a great idea in a seller’s market. They have all the required knowledge about the market and can help you to select the ideal house. Moreover, they can help you with the paperwork.

8 - Don’t use all your home-buying budget:  Try not to use the entire budget at once. In such conditions where the prices are increasing so drastically, the banks may appraise the value of your property below your buying price. When you are buying a house through a mortgage, the banks will provide you with 80% of the appraised amount. In case the appraised amount is less than your buying price, you will get a lesser loan and then you will have to pay more from your pocket.  A mortgage calculator can help you to know the amount you will have to pay as monthly payments. There are also online calculators, specially designed to calculate the monthly mortgage payments that you have to pay while buying a property in Canada. What you have to do is just enter some information like price of the property, down payment, and likewise.

9 - Try to keep your down payment liquid:  Do not invest the amount you are saving for the down payment. Keep it liquid. Save it in a high-interest savings account or short-term GICs.

10 - Don’t lose hope: In a seller’s market, the competition is very high. There will come several occasions, where you will not be able to obtain the winning bid. Don’t get disheartened. Learn from your mistakes and continue the search for your dream house.