A note of warning, this blog is based on managing the prevailing market conditions and it is important to realize that these can and will change.
Besides helping my clients build appreciating and cash flowing real estate investment portfolios as an investment real estate advisor, I’ve been helping my clients either sell or buy their home for a good while now. In this residential market, there are a few observations I feel are worth sharing with you.
What are the Current Local Market Conditions?
It is not news that in the lower mainland including the Fraser Valley has been basically a “Seller’s Market” for the last 2 years and it really heated up for the last 6 months. Vancouver is not alone, and across Canada it has been the most unprecedented fever pitched real estate market on record. Communities across British Columbia are experiencing the same phenomenon. The benchmark prices have massively risen across all three housing categories in the lower mainland.
Real Estate “FOMO” Creates a Perfect Storm
There has been a real sense of “Fear of Missing Out”. In my FOMO blog from this same time last year, I pointed out some strategies my clients and I have been employing to succeed in being the winning offer and getting them their home. Listings are way down and demand has been incredibly strong, making this a perfect storm of a “Seller’s Market”. Without getting into a blame game as to why the housing inventory is so low, as some politicians have done, one of the many reasons I see for this condition is that if a person wants to sell, they want to have already found a home to buy before they list, but that could backfire if the home they are exiting doesn’t sell at the amount or during the time needed before they close on their new home, so it potentially becomes a “catch 22”.
Tight Listing Timelines Limit Due Diligence for Buyers
Unlike pre-pandemic times, there has been little or no real opportunity for the buyer to conduct proper due diligence on the subject property. This was because of the typical sequence of selling a home during this most recent period of the pandemic. The list to sold fuse has become so incredibly short; homes were selling in a single day, or up to maybe 14 days, and that is from listing the home to having a firm deal! That is CRAZY! Typically, a home is listed on a Monday or Tuesday before appointment viewings/open houses which may start as early as an hour or two on Thursday or Friday evenings, two to three hours on a Saturday and Sunday and then offers were to be presented via email on the following Monday, Tuesday, or Wednesday for the listing agent to present to the seller for acceptance of the winning offer.
Windfall for Sellers is Perilous for Buyers
During this period the Sellers’ side has been in the driver’s seat and is able to almost dictate the price, dates, terms, and conditions of the deal. Because there have usually been multiple competing offers, the seller would choose the most acceptable offer comprising of the best offered price, dates, terms, or conditions.
Homes were and are still often selling significantly over asking price. Sometimes this was because the market prices are moving so quickly and desperate buyers were doing whatever it took to get that winning offer, but in my opinion, sometimes the listing/seller side would list a home artificially low as a tactic to attract multiple potential buyers to start a bidding war. This became a windfall for sellers and a potentially perilous situation for many buyers as they were and still are making offers with no subjects.
Why Viewing Homes is Looking like an Auction
It got to a point towards the end of 2021 and early 2022 that there were so many buyers outside of each home whether it was a house, townhouse, or condo that it looked like an auction. That was further impacted by short viewing time slots which were a maximum of 15 minutes each. Just to be clear, people typically spend more than 15 minutes to research a TV before buying it, but here they are doing this for perhaps THE MOST SIGIFICANT financial investment of their lives! What made it even more difficult for many buyers and agents both on the listing side and buying side was in some of the cases where there was overwhelming demand, there were 2 and 3 parties being permitted to view the same property at the same time, while trying to maintain social distancing protocols during Pandemic. These were the most unusual circumstances to navigate for all involved.
What are the Negative Side Effects of a Seller’s Market?
Some of the negative side effects of the tight “Seller’s Market” conditions are that listing are being released without pictures, lack of appropriate documentation, and agent knowledge of the property, with mere days between listing date and viewing dates. I want to note for my readers that this is not necessarily the listing agent’s fault as there is massive demand on those that service the industry from property managers, inspectors, photographers, appraisers, and lenders during this pandemic period. In my experience, there are so many professional and prepared agents, but there are those few agents that I found were ill-prepared for even simple questions related to their own listings.
Counteractive Buying Measures Include Extreme Due Diligence
For my buying clients, I used my investment realtor experience and knowledge and spent a great deal of time researching each listing before viewing the properties, which would include reviewing zoning maps, google maps, recent comparable sales in the area, all the available property documents strata or otherwise, titles, property condition disclosure statements, floor plans and ask questions of the listing agent, so that we knew if and what the potential concerns were when we viewed the property. We did this so that if it was a property my client liked, all we needed to do is determine if a pre-inspection was needed (typically done if the property was older than two to three years), and of course arrange financing, before making an offer.
Through advanced coaching and discussion, my buying clients are fully prepared and already prequalified but we still need the bank to do an appraisal and the property needs to appraise out properly or my clients would need to fund the difference between the selling price and the loan to value for what the lender appraised the property. We would make my buyer clients appealing by having everything in place, with a ready strong deposit, and a subject to financing condition with a tight timeline. My clients are fully prepared to spend little money on a pre-inspection and walk away from an expensive home rather than not spend a little and have an expensive problem that they may not be able to afford.
Things to Know When Hiring a Listing Agent from a Buyer’s Agent Perspective
Based upon my experiences as a professional on the other side of the real estate transaction (buyer’s agent) I noticed some traits that set some listing agents apart from other listing agents.
For those homeowners considering selling, what are some actions you can take to ensure that you get the best listing agent for your needs? The first point is there are thousands of professional real estate agents, but not all are created equal, so you will need to interview many agents. How can you find those agents? Ask for referrals from friends, associates, colleagues that have had a good service and ask them why they would refer the agent – it has to be more than money (what sets them apart?). Then, you need to QUALIFY the perspective agents to find the right listing agent for your needs. I have created a checklist for you to ask some important questions to assist you in the qualifying process.
Download my SELLER’S CHECKLIST FOR QUALIFYING A LISTING AGENT Here!
If you are considering listing your home please call me at 604-889-1760 to discuss your needs.