Real estate has changed over the past few months. The pace of the market slowed alongside a quick succession of interest rate hikes. Homes are still selling, of course, but at a much slower rate than we saw in the first quarter of the year.
These changes have led to a certain degree of consumer uncertainty. Some buyers wonder whether now is still a good time to buy or if the best strategic move is to wait for the pricing ‘bottom.’ This is problematic reasoning, though, because often we only know the bottom has arrived after the market has already started to climb. Darn it!
In truth, though, it seems the shock of interest rate adjustments is beginning to fade. Folks are becoming somewhat desensitized to the news as each new announcement comes along. Now it’s just a matter of getting through the slow summer months before we launch what is expected to be a reasonably normal fall season in real estate.
For buyers who are committed to making the move now, you’re not wrong. Any slight reduction in price that could occur over the coming weeks would likely be more than offset by higher interest rates. Ultimately this means the less-expensive price in October or November would be much more costly in interest charges.
If you are one of the savvy buyers considering scooping up a deal right now, here are a few tips that can help you navigate the market as it stands today, in August 2022.
Take Your Time
Compared to the post-traumatic stress experienced by some homebuyers in January of this year, buying a house right now will feel like you’re on vacation. By January everything was moving so quickly, homebuyers had very little time between the showing and offer day to decide whether to move forward on a purchase.
By comparison, buyers can now shop around for as long as they wish and have long discussions with their families about which house is best suited. Waiting for your lender to confirm financing is no big deal anymore, since you have more time. And you can even go back for a second or third visit to the house if you like, just to be sure the home is right for you before making a decision.
In short, there is no rush to making a decision in today’s buying market. Of course, it will always be true that well-priced, attractive homes will sell quickly. If you or your REALTOR® feel that the house you are considering has been priced under market value, it’s probably wise not to let any moss grow under your feet. But for many homes on the market now, this is not likely to be the case.
If you’re not sure which situation applies to you, contact your REALTOR® or, if you have not enlisted the help of a real estate professional yet, reach out to us today so we can help.
For buyers that may have started their home search for the first time during COVID, a conditional offer may be a completely alien concept. Now that the market has slowed, conditions are more acceptable to sellers because it may be one of very few offers they see on their home. Given that, as a seller it’s worth being a bit more flexible in allowing buyers time to do their research.
What are conditions? Let’s recap.
Offer conditions are clauses that may be included in an offer to purchase a home. These conditions are customarily included by a buyer who is presenting a seller with a document outlining what they wish to pay for the property. This document is known as the Agreement of Purchase and Sale, also called an offer.
What’s the purpose of a condition? In residential resale, it’s included most often to protect a home buyer by allowing time to research and perform due diligence on a property.
(It is also possible for conditions to be included for the purposes of protecting a seller. Upon receiving an offer to purchase, a seller may counter that offer and include conditions of their own.)
In the case of a buyer, most will want reassurance that the critical systems in the home like heating, plumbing, and electrical are fully operational and functioning well. To protect their interests, a buyer would include a home inspection condition in the offer to purchase. This allows a period of time, perhaps 5 or 7 days, to conduct a home inspection and ensure all is well.
You can include conditions for anything that’s important to you. If you need time to confirm your financing is in place with your bank, you can include a condition allowing time for that. If you’re buying a condominium and you would feel better having your real estate lawyer review the status certificate before committing to the purchase, you can include a condition for that.
We are working with clients now who are considering a home whose driveway is shared with the neighbour. If you are unsure about what this means for you, you can include a condition allowing time to investigate and obtain expert advice from a real estate lawyer.
Since the market is now beginning to favour buyers over sellers, you can now feel comfortable including conditions in your offer. Remember, they exist to protect you – use them.
For more on offer conditions, click here for the full article.
Prices Are Not What They Were
As you are considering your offer price, bear in mind that benchmarks may be hard to find.
The market has changed quickly in the past few months. Unfortunately, this is exactly the period your REALTOR® would normally use to evaluate comparable properties and provide pricing guidance.
As a result, some of the homes you use to evaluate a potential offer price may be slightly off. They may differ in important ways, or they may have been sold when pricing was higher.
So, how will you know the right offer price?
Our best advice is, review as many comparable sold homes as possible. Look at similarities and differences: square footage, land size, how many garage parking spaces, number of bedrooms, bathrooms, age of the home, finished or unfinished basement, and so on. After doing this review with your REALTOR® you will begin to get a sense of the fair market value of the home.
Once you’ve determined what you believe fair market value to be, you will know what price you can expect to pay for the property.
Remember, help is out there for buyers regardless of market conditions. Reach out to us today and we will get you on the pathway to being well-informed and feeling exceptionally confident about your purchase.***