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Tips for Buyers

Buyers – You Snooze You Lose!

If you’re an active home buyer you’ve probably noticed that house prices have skyrocketed, especially this first quarter, resulting in many buyers having had to give up their dream of buying a single family home. Some have opted for a condominium, a multiple family or have moved outside of their preferred area and even to the suburbs to make it affordable to own.

When a market is moving as quickly as the Toronto real estate market with house prices going up as rapidly, buyers have to be more diligent with their house search and become more sensitive to the passing of time because each month that goes by houses will cost tens of thousands of dollars more.

Here’s a list of a few short sighted mistakes buyers make that could lessen your chances of buying the right house as quickly as possible in this fast rising market.

Just Listed, a red home sign, Real Estate Concept

1. Buyers who want to buy only through the listing agent. Usually these buyers are looking for a listing agent who will either give them a commission kickback or priority over another buyer to buy the house (the latter being against industry rules). You MAY eventually find an agent who will do this but this strategy will certainly prolong the search and could potentially get you into a lot of trouble.

  • A critical downside is that you don’t have an agent focused on finding a house for YOU. The onus is on YOU to find the house and make contact with the listing agent. Considering the market is moving at torpedo speed, by the time you notice the property for sale and contact the listing agent, it could potentially have sold. If this happens for months, you will eventually be paying much more for your house.
  • This strategy could bring trouble because, when making such a huge investment, it’s important to become educated about different offerings in different neighbourhoods, best value for your money, what to look for in a house that could potentially cause problems down the road etc. When you’re dealing with the listing agent, there is no time to do any due diligence because all the listing agent wants is to sell you THAT HOUSE – good, bad or ugly.

Last year we were contacted by an individual who asked if we would work with her to buy a house only in Hillcrest Village because she wanted to work with other area experts in other areas. We explained that we sell real estate in many different areas but her motivation was to get each listing agent to give her a “commission kickback”.

I asked: “Do you want to find the right house or is your main concern commission kickback?”

Of course she answered “I want to find the right house with the listing agent.”

I replied: “If you continue down this road you may potentially get yourself into a lot of trouble. I’m going to assume you are contacting many area experts and making this same proposal, is that correct?”

She replied yes and I said: “As soon as some agents find out that you’re working with other agents as well, they will sell you anything just to beat out their competition. So thank you for the offer but I am not interested in selling you any house just to sell it to you before anybody else.”

We wanted to sell her the right house and this ‘beat the clock’ game she was setting up for agents could have been disastrous for her and we wished not to participate.

2. Buyers who insist on using a friend or relative who is a part time agent or who works outside of the area you are looking to buy in.

  • Through my experience I have learned that sometimes, friends or relatives can be over protective and allow you to miss opportunities.
  • Furthermore, I have found that, some don’t take control of the situation because they don’t want to hurt your feelings for fear that it may affect your relationship.
  • Also, without a doubt, ANY agent who works part time or is unfamiliar with the area you are looking in will not be current, can not act in a timely way and will not help you find the right house as quickly as possible in this fast paced market.

In an upward rising market this strategy will only prolong your purchase costing you tens of thousands of dollars.

3. Buyers not willing to make compromises. You probably have a lot of items on your wish list but, unless you have unlimited funds, you may have to compromise on some. These compromises might include accepting outdated decor, foregoing that extra bathroom or even making repairs to the home yourself. Of course, there’s always the option of continuing to rent while accumulating enough to be able to afford everything on your list or you can put off buying that bigger house. However bear in mind that if you decide to hold off, and the market continues to go up, you may find yourself behind the proverbial eight ball because you will have to pay that much more for your house down the road. Being too picky can end up costing you a great deal of money.

4. Buyers who don’t see beyond the staging. Sellers can use “tricks of the trade” to enhance the look of a house in order to generate higher offers than they otherwise would get. Staging, minor upgrades or cosmetic fixes will pretty up a house and make it look great. A cheap investment of $3,000 by the seller may end up costing you an extra $30,000 because the house shows so well. But remember that a messy looking house will probably save you money on offer date because it may have fewer interested buyers. After all when you take possession of any house it will be bare and vacant. A better strategy for buyers on a budget is to look for a house you can add value to by finishing a basement, renovating a kitchen or bathroom or as simple as tearing down the hideous wallpaper and painting.

5. Buyers who insist on putting in conditions or making a low offer when there are other offers on the table. When there are many buyers interested in the same house, it will likely sell for a price that is much higher than the list price. The buyer who is prepared to pay will up their ante every time their agent tells them there is another registered offer on the property. So why would you instruct your agent to present an offer on your behalf when the chance of you procuring this house is very slim, at best? The result of this is higher bench mark prices in an area you wish to buy in and it delays YOUR purchase in a fast rising market setting you up to pay more tomorrow.

If you’re a frustrated buyer who can relate and you have not signed a Buyer Agency Agreement with a broker, connect with us. We’ll help you see the possibilities, the opportunities, find you the right house, at the lowest possible price as soon as possible because every month you are missing out on buying a house at the current rate of increase is costing you tens of thousands of dollars.