If you’re a Buyer looking to get into Toronto’s condo market, take notice: it’s time for some new strategies.
In Short:
- Demand for good condos in good locations is outstripping supply in Toronto and that’s driving prices up…quickly.
- Condo Sellers are borrowing from the house Sellers playbook (read: setting themselves up to receive multiple offers). Condos are regularly selling OVER the asking price.
- Gone are the days of a condo being on the market for 30 days and being able to negotiate….we’re now comfortably in a Seller’s market.
How To Score Your Dream Condo
- Make sure you get new condo and loft listings the moment they are listed. Ask your agent to set you up on Collab – it’s the system that allows Toronto agents to give you real-time access to new listings so you don’t have to wait to get a Property Match email the day after a condo is listed for sale. If your agent doesn’t know what Collab is and doesn’t want to find out for you…well, consider getting another agent (if you haven’t signed a Buyer Representation Agreement with them, of course).
- Don’t wait – go see new listings the day they are listed. Forget about waiting for the weekend – many condos are sold before the weekend. Speed is the name of the game.
- Make sure you’re working with an experienced and connected agent. Contrary to popular opinion, the agent you choose to work with when you’re on the buying side matters. A lot. Busy agents often know about upcoming listings before they are listed and have the relationships to help you get the condo you want. Also: they know how to play the condo game by the new rules and aren’t giving you advice that worked 18 months ago. [Related: What Does a Buyer Agent Do and Does it Matter]
- Have your deposit cheque ready – In the old days (ie, a few months ago), you were able to provide your deposit (usually 5% of the purchase price) within 24 hours after a Seller accepted your offer. New strategy: show how serious you are by submitting the deposit cheque WITH the offer (instead of the next day). It’s one less thing for a Seller to have to worry about and having a cheque in hand can make the difference between getting the condo you want and watching it sell to someone else.
- Get your financing in order. If you end up in a multiple offer situation, you likely won’t be able to include a financing condition in your offer if you want to be competitive. No, that doesn’t mean you have to take a risk and pray, it just means you have to have your financing in place before the offer. A good mortgage broker can help give you assurances that you can make an offer without a financing condition.
- Choose your real estate lawyer NOW. If you end up in a bidding war, you’ll want to have your lawyer review the Status Certificate before the offer. The status certificate is the document that contains information about the financial and legal health of the condo corporation and having a lawyer review it is a normal part of the process of buying a condo. In a hot condo market where multiple offers are becoming the norm, you’ll want to have your lawyer review the document before the offer so you don’t have to include a Status Certificate Review condition.
- Money, Money, Money. In a bidding war, cash is king and the Seller is almost always looking for the highest price. Condos are easier to value than houses because so many of them are similar or identical, so your agent should be able to give you excellent data. But remember, in a market that’s increasing in value, the price of a condo will be MORE than the price of the last one that sold.
Pro Tip: Comparable sales are by definition historical. In a market that’s moving fast, it’s important to remember that comparable sales point to a historical value, so you’re essentially looking in the rear view mirror. In a market where prices are increasing, you will ALWAYS be paying more than what the comparables indicate as current market value. It’s like a staircase: for each step, you need to step higher. If you assume the next step is the landing, you’ll likely misjudge.
- Be ready for the appraisal. Most lenders conduct an appraisal to ensure that the amount you paid for the condo is not above market value. If you paid $520,000 for a condo and the bank appraises it at $505,000, they’ll only lend you a mortgage on a $505,000 value, so you’ll need to either come up with the difference ($15,000 in this example) on your own, or go to another lender and hope for a different appraisal. [Related: All About Appraisals].
- Accept that you aren’t in charge. In a Seller’s market, the Sellers are in charge and will often dictate terms such as closing date. Be as flexible as you can be…otherwise, the Seller will just turn to the next Buyer.
