Buyers Beware

Cheri and I usually work with a few more buyers in a year than we do sellers. They just don’t get as much attention on these pages, which are given over a lot of the time to glossy photos and floor plans. But much of the recent handwringing during our distanced office chats has to do with how to navigate this mad market with our buyer clients.

So let’s talk a bit about the predicament buyers find themselves in. Local house prices went up almost 18% last year, and another 25% total in the three years before that. I’d argue that it’s not all wine and roses for a homeowner who needs to move, rather than cash out and travel or rent, but yeah, it’s mostly tough out there for buyers. But I also think prices will go up again this year, perhaps by quite a bit, and so waiting out the market isn’t really the best option if the end goal is home ownership. And so what do you do?

What I would say right off the top is that getting a realtor to help you is vital. It doesn’t have to be us, that’s not my point here, but going it alone is a good way of asking for trouble. When you find your dream house on realtor.ca, for instance, you can’t tell from what’s on the screen whether offers will be reviewed the same day or a week down the road. You also can’t tell what the place last sold for. Or what sort of attention it might get now it’s on the market again. Will it sell for above the asking price? Is the asking price even reasonable? You might not know whether it’s in the school catchment area you’re looking for, or whether the neighbour raises guard dogs in the back yard. Or mink. All that good stuff. A realtor should be able to answer those questions for you and anticipate a whole bunch more. 

You need - to start with the basics - someone in your corner who is going to make sure you don’t miss a perfect house. An agent who will set up a good automated search for you. An agent who listens. An agent who knows how to write an offer that gives you the best possible shot. An agent who likes houses and has a decent understanding of how they are put together and also how they might fail you.

I feel for all the new realtors out there, and lots of them are learning quickly and are mighty talented, but I really do think that right now you might need to look for experienced help. An agent who competes for houses on a very regular basis. This is no time for your representative to be wondering if such and such a clause is wise in this or that situation. 

You also need someone who knows the neighbourhood well. I don’t sell houses in Belleville, for example, because I don’t know the market and I don’t have access to the local data. But more and more realtors make the drive from Toronto to represent clients who are moving this way. I think that’s mad. (Though I absolutely love when those agents show my listings. I look forward to their offers. Some of them have paid shocking amounts for houses here.)

Those record-setting and isolated sale prices don’t help buyers. Local realtors will often try to use those statistical outliers as evidence for asking the same price the next time a similar house comes to market. You need an agent who’s acutely tuned in to the market as a whole, and who is even a bit sceptical of data that stands apart from the herd.

That’s especially true when most of the offers I see and write are unconditional. There is often no opportunity for a home inspection, or even a chance to drop the offer on your mortgage broker’s desk for a considered opinion. Pre-approvals, and maybe a pre-inspection too, are vital parts of the new reality. Of course, this can lead you further down the real estate rabbit hole: who should I have in to do that pre-inspection? And what exactly are the risks involved with offering without a financing condition? What happens if the bank sends in an appraiser and the house doesn’t stack up to the asking price?

I haven’t even mentioned yet the fact that we’re still in a lockdown. How are showings being conducted? Should I worry about my safety? What precautions exactly are being taken to protect me and the sellers? Shouldn’t I stay home? Are virtual tours and video walkthroughs available?These are the best questions of all.

The aim here, I swear, is not to scare you. But a healthy degree of caution is fully warranted. I bought my house some fifteen years ago more casually than I consider a new pair of shoes. The house is great, and I wouldn’t be anywhere else, but man, was I dumb. It could all have gone so easily sideways.

So get yourself an agent. And make sure they can answer your questions in a way that makes you comfortable. Do they know their stuff? Do they seem to know what they’re looking at when you’re out together? Do they get back to you when you have questions? Have they been at this crazy business for a while? Do you - to put it plainly - get a good feeling from them? 

Some buyers, by the way, will just call the listing agent for any house they like the look of, thinking they might get a deal that way, and that the agent may cut her commission, and some of that saving may end up in the buyer’s pocket. The trickle-down theory of real estate. Well to be honest it probably won’t work out the way you hope it will. I could go on all day about that strategy and why I think it’s problematic. But the bottom line is that I think having someone who’s been with you all along, and who understands what you like and what you need, will serve you much better than calling up even the nicest stranger and thinking they might be able to help you buy a house this afternoon.

So where does that leave us. Well  it boils down to this: Buying a house is a big deal and you should take it seriously. Do your homework and ask a lot of questions. Try to stay in the driver’s seat rather than simply getting sucked along at a breakneck speed. I swear it is still possible to get a good house without overpaying. You just just need a good guide along the way, because these days it can be a bit of a trek.