Five tips for people looking to buy a home in Ottawa this spring
OTTAWA -- In a typical Ottawa real estate market there would be between 3,500 and 4,000 active listings.
During the past three years, though, inventory levels in Ottawa have consistently dropped.
There are now about 1,200 active listings on the market, with low inventory and high demand making for an extraordinarily competitive market.
“This lack of options combined with the increase in demand has created an extremely competitive environment for buyers where many of them find themselves in a multiple offer situation,” realtor Taylor Bennett says.
“While most buyers would prefer to avoid these scenarios, the fact of the matter is that this is the ‘new normal’ in real estate today.”
Bennett shared these tips for homebuyers on CTV’s News at Noon.
1. Think first, act fast
“Not only are properties selling for higher prices than ever, but they are selling faster too. For both residential and condo-style properties, the average time for a sale has dropped by more than 50 per cent, which means buyers have to be prepared to act faster than normal. But that's where mistakes can happen.
"Having recently bought a property of my own in a multiple-offer situation, I can say from recent firsthand experience that purchasing a home can be a stressful and emotional experience, which is not the best mindset to have when deciding to buy the most expensive thing in your life.
"Sitting down with your trusted real advisor in advance of entering the market or entering into a bidding war is a crucial step to make sure you have a solid plan in mind so your emotions don't get the best of you when the big day comes.”
2. Lock it down
“If you haven't gotten or renewed your mortgage recently, these numbers may come as a surprise. If you bought your first home in the 1990s you likely secured an interest rate that would rival a credit card rate. But for the back half of last year and so far in 2021, qualified buyers can get interest rates under 2 per cent - and you can lock these rates in for three, six or even 12-month periods while you shop.
"While a one per cent change to interest rates doesn't seem like much, it has had a huge impact. For example, if you are paying approximately $2,000/month in a mortgage payment, in Feb. 2020 that would have paid for a $615,000 loan, but with the reduced interest rates that same $2,000/month payment covers a $710,000 loan - almost a $100,000 difference in buying power.
"Rumours are that rates will be increasing this year, so smart buyers should lock down their rates before they go up.”
3. List price illusion
“Prior to 2020, when the real estate market was balanced, sellers typically listed their homes for one to two per cent higher than their market value. The slightly higher price was chosen to help out in negotiations to give some ‘buffer room.’
"Now, most list prices are no longer based on market value and are being chosen to help out in the marketing. Many sellers deliberately list their homes below the market value to help maximize the interest level - sometimes even $100,000 or $200,000 below the market value - resulting in a huge difference in the list to sale price.”
“To the uninformed buyer, the difference in the list price to sale price may be interpreted as buyers overpaying for homes. But in many cases, the list price was never a price the seller would have accepted.
"This is where working with a professional agent who knows the market is invaluable to buyers to help them in researching the true market value of a property.”
4. Flip it and reserve it
“Buyers today have to almost reserve their entire approach when dealing in this market. In previous years, buyers used to have much more time to select a home, secure financing and then negotiate a favourable offer with conditions.
"But in this fast-paced market, that approach simply will not work for most homes. But buyers can still have the same protection as before…they just need to change the order of their steps.”
“It may be tempting to forego a home inspection simply because the home ‘looked good’ or was recently built. but even a brand new home can have issues. Some sellers have inspections done in advance and provide the report to potential buyers, but this isn't overly common and many buyers prefer to have their inspector assess the property.”
“While this normally won't be accepted as a condition, most sellers will allow buyers to conduct an inspection prior to offers being considered.”
5. Private properties
“Most homebuyers are familiar with MLS and Realtor.ca, but it may come as a surprise to some that not all available properties are posted there.
"There are various reasons why a seller may choose not to list their home on MLS - privacy, specific selling conditions, health concerns, a unique situation or property, construction being completed. But since their homes are usually publicly advertised, getting access to these homes can be difficult if you aren't working with the right agent.”
“For example, buyers working with our brokerage get exclusive access to all of our listings prior to them hitting the public market, giving them the best chance at purchasing these homes before anyone else and beat out the competition.”