Buyers BEWARE - Or At Least, Be Aware...
HOME BUYERS TAKE NOTE
We’ve been really subjected to the many news stories that seem to dominate the feeds on a daily basis around the phenomenal strength, hurricane strength in fact, that the market seems to be packing right now. Homes are selling over ask, there are multiple offers and buyers are being turned away time after time due to the imbalance in the market. Simple mathematics show us that when demand far exceeds supply, there are going to be many disappointed would be buyers.
So what is
driving all of this? Could it be the pandemic? After all, covid is the easy
answer to justify so many things right now. Could it be interest rates? These
very low rates are making both qualifying for stress testing interest rates and
getting mortgage approval just a bit easier. Once rates go up (and they most
certainly will…) the buyer’s dollar will not have the same purchasing power
that it currently enjoys. Could it be just that it is time? Has the pendulum simply
taken its natural path and swung far to the right? Or perhaps this market is a byproduct
of other life factors that for now will remain a mystery. Who knows, maybe
there is a combination of a number of things going on right now. The result we
know is what we are seeing in the marketplace.
So let’s
chat for a moment about the buyer. After all, it takes two to tango and without
willing and able purchaser’s we do not have productive and lucrative sellers.
There does seem to be some buyer fatigue happening right now at least from my
experience. Buyers are being denied time after time with their offers and are
now getting a bit gun shy with respect to going the motions and emotions of
putting offers in. How much rejection can one take and what amount over asking
is reasonable?
This market
is encouraging, expecting and somewhat endangering buyers by expecting (yup,
lots of e’s in there) offers to come in firm, no conditions. It’s the perfect
example of being caught between a rock and a hard place. If you put conditions
in the offer such as financing or home inspection, it is not likely that you
will “win” in the bidding process. If you don’t put them in and get the home
you may find yourself buying a lemon which you will pay for in the end.
Let’s look
at a couple of the big ones:
Q: What happens when you try to close a deal and find that the bank will not appraise the home for what you offered as your purchase price? | A: You may have to come up with the difference between the appraised value and the purchase price. Could be very significant especially if you offered $100k over the true value. |
Q: What happens when you discover a crack in the foundation some weeks or months later? | A: Tough luck (maybe unless you have a really top shelf lawyer who can manage to go back and justify why you did not use the home inspection clause) |
Q: What happens when you cannot come up with the large deposit you used as leverage to purchase the home in this very competitive market? | A: Contrary to what some believe, this does not make the deal simply go away. You are now in breach of contract which could have some pretty serious legal ramifications. |
Buying in today’s market has a number of variables that have to be considered. It can be intimidating but not insurmountable. It is probably fair to say that buyers have to have patience (in terms of securing a property) yet be persistent and assertive at the same time (as properties are selling quickly).
Finally,
start with a plan. Have your finances, objectives and your needs organized before
you start looking. Pre-approval, quick access to deposit funds and certainty
will get you moving in the right direction.
Thanks for Reading,
Happy Buying, Happy Selling.
Always here to help and certainly never too busy for you our your referrals!
Andrew 416-276-5453
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