Once upon a time, a house hunter could search for homes in an approximate price range and feel pretty good about staying on budget.
In the current market, this is no longer true. These days, most houses are priced well under the expected sale price. This can be confusing to home buyers who believe that the list price is meant to convey what a seller will accept for a home.
One exception to this rule is condo apartments. Most apartments continue to be priced accurately and, depending on location, have sold for close to list price over the past several months.
So if the list price is not to be believed for detached, semi’s, and townhouses, what is a home buyer to do?
First, consider shopping under your budget. If your budget for a townhouse in Mississauga is $750,000, set $599,000 as the top threshold in your search results. This will ensure that you have a reasonable buffer and allow you to make your offer closer to what the property is likely to sell for.
Second, hire a REALTOR® that knows their way around the market. The most successful real estate salespeople prepare their clients well in advance. The best of the best conduct their research before you ever see the property, investigating potential sale price and offer dates in advance. This will put you in a strong position when you select the house you wish to buy and may even give you an edge over other buyers who want the same home.
Does location matter? For example, if you are shopping in Brantford or St. Catharines, is the strategy different from homes selling in Mississauga or Milton?
In short, not much. There will be some market differences in terms of how long a house stays on the market before it sells. You may also see variation in how much over asking the house ultimately fetches, or in how many homes are for sale in each area.
But the overarching strategy will be much the same.
If you are searching for homes under $800K, set your top threshold at somewhere around $599K to be on the safe side. If you hope to keep your spend around $1M, set your upper limit at $800 or $850K. And if you are shopping for condo apartments, expect to pay roughly what the list price indicates.
Importantly, these guidelines are very approximate. The buffer you may need to hold back will vary by market pace, suburb, housing style, and sometimes even by neighbourhood.
This is one of the reasons why your your REALTOR® will be an invaluable resource. They will support you in your search and guide you towards homes that keep you within the financial boundaries you have set for yourself. At the same time, you will be given specific advice about what buffer you may need for each area.
Still not sure how to proceed? Send me an email and let’s talk.***
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