With historically low interest rates driving demand, and a record-low supply of listings, we are squarely in a sellers’ market: one in which sellers have the advantage. (In comparison, a buyers’ market is what happens when there are more properties than people who want to buy them, and that puts buyers in the driver’s seat.) And it doesn’t look like it’s going to change anytime soon.
So what does it take to land a property in a market like the one we’re in now? We polled our agents, and here are 9 tips they offer their own clients on succeeding in a sellers’ market:
1. Start by doing your homework
In a strong seller’s market, the asking price often doesn’t reflect what the sellers actually want to get for the property. They’ll start off low to attract more interest: it’s a tactic designed to start a bidding war. To get a sense of a property’s actual value, check the sold prices for comparable properties in the area. You can do that easily on condos.ca, property.ca and mrloft.ca: as you search an area, simply toggle from “for sale” to “sold.” If you’re looking at a specific building on condos.ca, scroll down the building page to “Price History,” which will show you what units have sold recently, and for how much.
Price history details, M5V at 375 King St. West, Toronto
2. Work with an experienced, full-time real estate agent
A good agent will advise you on what similar properties in the area are selling for, let you know if a property has been deliberately underpriced, and give you a sense of an offer amount that would likely be acceptable to the sellers.
3. Get pre-approved
When you’re buying in a sellers’ market, you have to be able to move fast on a property. Putting in an offer that’s conditional on getting financing is a sure-fire way to lose a place you love, since someone that’s already pre-approved will be able to go in without that condition. And sellers don’t like conditions (more on that below.)
4. Lead with your best offer
If there’s a possibility of multiple offers, you won’t do yourself any favours by going in at a price that’s lower than the max you’re willing to pay for that property. If someone else wins it, you’ll regret you didn’t pony up that extra $10K. But if you offer your best price and it ends up selling for more, you can be comfortable walking away, knowing you gave it your all.
5. Consider making a bully offer
A bully offer is a tactic that’s often used in a scenario where a property has an offer date. The sellers have put the listing on the market (usually at a very attractive price), and are waiting for it to generate interest before accepting offers on a specific date. You can circumvent this process by making an offer in advance of that date. But there’s a reason it’s called a “bully” offer: to work, it needs to be aggressive enough to make the sellers think they won’t be able to do better in a bidding war. Your agent can advise you if a bully offer is the right move.
Read more: bidding wars and bully offers: strategies for success
6. Drop the conditions
Sellers will usually go with the highest offer that’s the least amount of hassle. And conditions, whether they’re around financing, home inspection, or seeing a status certificate, add hassle. So get pre-approved to take financing conditions out of the equation. For the home inspection, if you’re buying a condo, it’s not as vital as seeing the building’s status certificate. (The seller’s agent should have the certificate available.) For houses, many sellers will have had a home inspection conducted to give buyers something to rely on when making unconditional offers. However, without a house inspection, it’s buyer beware: that dream home could end up being a money pit. Your agent is your best guide in this case.
7. Rethink your wish list
If you keep getting out-bid, you might have to rethink price, location, size or amenities and price. Don’t let the perfect be the enemy of the good: a little compromise can put you back into the game.
8. Keep your down payments liquid
Have funds available for immediate deposits and down payments: having to cash in an RRSP or investment in a high-pressure, time-sensitive negotiation is stressful at best, and at worst, can lose you a place you love.
9. Get personal
For sellers, it’s not always about the money. People feel nostalgic about their homes – maybe it’s the first place they lived together, or it’s where they’ve raised their kids. Adding a personal message to your offer can help them see that their home is going to the right people. Tell them what you love about the property, and how much you will appreciate owning it if they accept your offer. Let them know you’ll maintain the home’s architectural heritage, talk about tending to the beautiful rose garden, or mention what a great place it will be to raise your family. It’s a simple gesture that can go a long way: many sellers want to see their property go to someone who will appreciate it.
Don’t let a sellers’ market discourage you. If you’ve got your down payment ready to go, you’ve done your research and are ready to move fast on opportunities, you’ll get there.
Need expert guidance on navigating the Toronto and GTA real estate market? Talk to a property.ca agent to get the advice you need to make an informed choice.
Should I invest in real estate in a sellers’ market?
When properties are going for top dollar and there’s competition for even the most mediocre places, it can be tough to land a place where you’ll be able to charge a rent that covers your costs. But with the Toronto rental market moving quickly back to pre-pandemic levels, that isn’t likely to be a problem for long. Plus, it can cost money to hesitate in a market that’s showing no signs of slowing down: property prices will only go up.
“Serious investors should commit to learning how to buy in a seller’s market,” says Sabine Ghali, Managing Director, Buttonwood Property Management Toronto. Even if the competition is fierce and the prices are high, it’s still possible to find a great deal.”