The mere fact that we’re talking today about how to “win” in any market signifies that the Toronto market is, at least typically a seller’s market, and that buyers need to strategize accordingly.
While there are peaks and valleys in any market, and while there have been a few down periods in the Toronto market over the years (think 2008, 2017, 2022), for the most part, the last two decades in Toronto has been a tough place for home buyers, no matter the property type, price range, or geographic location.
Did you know we have a podcast? Check out The Last Honest Realtor Podcast right here.
Hindsight is 20/20
Many would-be Toronto buyers start their search process with one of two ideas that have historically been destined to fail: 1) Wait for prices to drop and the market to soften, 2) Time the market to be active in a down period.
With the benefit of hindsight, we could look back at periods over the last twenty years when it was advantageous to purchase, but when we’re looking forward in a market, it’s simply not easy.
In the fall of 2022, after prices had declined from the high in the spring, I was working with several buyer clients who said, “We want to wait longer and for prices to decline more.” These buyers could have purchased at a 10-15% discount relative to the spring, but instead held out hope that prices would continue to retreat in early-2023. That didn’t happen, and two of these clients ended up panic-buying in April of that year, paying more than they could have the previous fall.
Timing the market is very, very tough, and my advice to any would-be buyer out there is to work in today’s market, not yesterday’s, and not tomorrow’s.
That’s first and foremost.
Define Win?
And when you are working in today’s market, well, you should identify what a “win” is for you.
At the most basic level, a “win” is to purchase the home you want at a price that you can afford. But when? After how long a search? In what market conditions? And how long is your closing date? Is this what you wanted? What was your deposit amount? Was this hard for you to come up with? Did you get to do the home inspection you wanted, or were you rushed into making the offer? Did your significant other see the home, or did you have to act so quickly that he or she was only able to view the property online?
When you think about it a little bit further, the “win” might not only be buying the house you want, and paying the price that you can afford, but also being satisfied with the process.
Thinking about buying a home in the near future? Read these buying blogs next:
- Why Waiting for the Market to Improve Doesn’t Make Sense
- Do You Really Need a Buyer’s Agent?
- Your Ultimate Guide to Buying Your First Home
Seasonal Changes
Throughout the calendar year, the market is going to ebb and flow, and buyers will feel a different market “vibe” in February than they would in, say, August. For a buyer to be satisfied with the home-buying process, it’s paramount that their real estate agent prepares them for the market that they’re working in.
For example, when my phone rings in the first week of January and new client tells me that they want to get out there and start the search, I explain that January is a very slow month for new listings and that much of what we see on the market are actually re-listings from the previous fall. Then I explain how inventory will ramp up in February, but so too will competition, and that by the time we hit March and April, “offer nights” are almost automatic, as is competition therein.
The market will eventually slow down as it always does, in May, June or July, depending on the year, and while some buyers will choose to be active when listings are sitting on the market, sales are low, and the balance seems to point in favour of the buyer, they have to remember that a large percentage of available listings in the summer are re-lists from the spring, and the quality of inventory just isn’t the same as it would be in a prime market, such as the spring or the fall, in addition to the “selection” that they would benefit from in a prime market.
Is seasonality over in real estate? Read this blog to find out.
Weigh the Options
I often ask my buyers, “Would you rather pay a few percentage points less for a home, but really only have one or two options, or would you rather pay a bit more for a property that checks all your boxes, and also allowed you to choose from several similar homes?”
A better way of putting this is what my father told me years and years ago: “It’s better to overpay for a home you love than to underpay for a home you like.”
But all of these variables and all of these lessons return to the same point of origin: being and thinking rational.
Understanding the market that you’re working in is the first step on being successful as a buyer, but acceptance of that market is crucial as well.
Looking for more answers? Keep reading these posts next:
- What Not to Do Before Buying a House
- Is It Better to Buy First or Sell First?
- When is the Best Time to Buy a Home in Toronto?
Price isn’t Everything
Keep in mind that price isn’t the only variable in a market or in an offer to purchase, for that matter. While other salient points of an offer could be the deposit amount, closing date, irrevocable period, clauses, and conditions, just to name a few, buyers must also consider how the process of listing and pricing real estate can change, market to market.
For example, if we’re working in a red-hot market cycle where entry-level, single-family home are routinely being under-priced and listed with an “offer date,” then soliciting sixteen offers, I think it’s fair to say that a buyer who submits a conditional offer doesn’t have a chance to win, do they?
That question is supposed to be rhetorical, and yet there are still some buyers, and potentially some readers of this post, who will say, “I would never buy a home unconditionally!”
I know that buyer. His dad told him, or his colleague told him, or often his bank, who should know better, told him to submit a conditional offer. But in certain market cycles, those offers are dead on arrival.
Speaking of price, can you still find “cheap” real estate in Toronto? Read this blog to find out.
That’s not exactly a “wining formula,” is it?
Then again, I’m hardly suggesting that a conditional offer never makes sense. I’ve represented several conditional offers this year, and been successful with a few of them.
The point I’m getting at here is that the market determines how a buyer needs to operate in order to be successful, as does the individual situation.
A house worth $1,400,000 is listed for $999,900, with an offer date, and there are fourteen offers on the scheduled offer date. Does your offer, that’s conditional on a home inspection and satisfactory financing, have a shot? Absolutely not.
A house is sitting on the market for 38 days, priced at $1,399,900, after being reduced from $1,449,000; can you make a conditional offer and expect to be successful? Absolutely yes.
Countless articles, blogs, newsletters, and books have been written on “how to be successful” but most of them lack the crucial component: context.
I could explain the ins and outs of pricing and market value, negotiation and offer strategy, clauses and conditions, and more, but all of these are subject to change relative to the market.
How to Win Any Offer
The truth is: the simplest way to gain an advantage in the market, as a buyer, is to understand and accept the current market conditions if you plan to work within that market.
While I’m sympathetic to the cost of housing in Toronto, in addition to understanding and personally witnessing the frustration and difficulty that many buyers endure while house hunting, I always caution my buyers not to be in denial about the market that they’re working in.
If your risk/reward compass is pointing you in another direction, and you want to wait for next summer, next fall, or next year, then godspeed and good luck. But if you want to be successful in today’s market, you need to educate yourself on today’s market conditions, accept them for what they are, master the understanding therein, and plot a course forward – not backward…
Looking for help finding a property in Toronto? Reach out at any time by calling 416.642.2660 or emailing admin@torontorealtygroup.com. We’re always happy to chat!
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