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With property appreciation in the Province of Ontario ranging between 34% and 50% since this time last year and housing sales hitting the proverbial mortgage ceiling during the first quarter of 2021, eager Ontario borrowers are anxious to take out mortgages to buy into such a robust real estate market. The same could be said for current Ontario homeowners who are seeking creative ways to tap into skyrocketing equity numbers for 2020 and the first quarter of 2021.
Second mortgages can be negotiated for Ontario homeowners that will unlock equity and put funds towards buying second properties or these funds can be put towards any host of uses ranging from home repairs and maintenance to consolidating loans that will help pay off multiple monthly liabilities.
Throughout this housing frenzy, one common thread remains; a buyer whether seeking a primary residence or an investment property will likely be facing many competing offers when it comes to showing interest in a particular property. Bidding wars continue to dominate the Ontario real estate market as we move further into the peak Spring buyers market.
It is a seller’s market. Sellers are routinely expecting to receive well over the asking price, and many of them do!
What You Can Do To Prepare for the Competition
Like anything of importance, the more prepared one is to take on the challenge the better the outcome. When it comes to the bidding wars that you will find yourself embroiled in, you should be more prepared than the competition.
Preparation is not a completed process. It simply entails common sense real estate steps that will enable you to walk into a house that grabs your fancy, ticking off most of the boxes in your housing list, and being in the position to put in an offer on the spot - WITH NO CONDITIONS PREFERABLY. The no conditions offer can be a risk whether you are saying no to the property inspection or no to the finance condition, but so many are taking that risk simply to stay in this competitive market.
The following steps will help you be ahead of the pack:
Be very clear on the area(s) that you want to buy: Do not be derailed by houses that pop on the market in areas outside of your housing list
Know your credit score and credit standing: The last thing that you want to happen is to have an unexpected problem with your credit to pose a stumbling block in your ability to pull through with your mortgage financing.
Get a pre-approval: This is a crucial step to take. Why? It boils down to the credibility that a pre-approval will give you in the eyes of the realtor and therefore for him or her to note to the listing agent. A pre-approval technically does not exist the way they did a few years ago. Only with an accepted offer will a bank review fully a mortgage application. That being said, find yourself a good mortgage broker/agent to guide you, their review of your details and pulling credit would be just like having a pre-approval. I emphasize though, find a good mortgage agent, that is one key component; it is not only the agent that tells you they can get the best rate out there. The mortgage process is more than just “best rate agents”, service and knowledge is even more important.
Be clear on your mortgage limit: Even if you are pre-approved for a certain amount, be careful that you have wiggle room for closing costs which includes land transfer tax, and administrative fees when closing on a home.
Work with a reputable realtor: This means not a real estate agent that is simply looking to get the commission, but one who will invest their time in you and comes with great industry knowledge and experience - one that will now the ropes.
Be prepared to not include any conditions in your offer: Especially conditional on financing! This is one of the reasons I mentioned above how important it is to find a good mortgage agent. You need to listen to her/him on what can and cannot be done. Going in with no finance condition is not always for every borrower.
Be more than prepared to offer well above the asking price to be in the running: This is where your real estate agent (a good one) will be able to show you data and advise you on what the best offer price should be.
Do Not Lose Sight of the End Prize - Finding the Home That is Right for You
Most importantly, have fun in the house-hunting process. Yes, many buyers are also looking for properties at the moment and inventory continues to trail behind the number of buyers.
Despite the current reality, the bottom line remains; even if you lose out on some properties to higher bids, you have narrowed down the playing field. With every offer you put in you are one step closer to your dream property.
Happy Hunting!
