Canada’s housing market is cooling. According to recent data from the Canadian Real Estate Association (CREA), home sales fell 12.6% between March and April.
While home prices may not have experienced such a significant drop, demand for homes appears to be cooling nationwide. If you’re looking to sell your home, it’s important to consider how the new market will affect you.
Selling in a buyer’s market
When considering selling your home, it is invaluable to think of the process as a business transaction. You have a product, your house, that you sell to a customer. It is important to anticipate customer wants, needs and wants and market your product accordingly.
Bradley Watson, host of Toronto’s #1 Real Estate Podcast and a real estate agent and investor in the Greater Toronto Area, notes that “people very quickly forgot that there are markets where you have to market and present your home the right way, and have patience for the right buyer.”
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At the same time, you should think about why you are selling your home. Are you selling to reduce your living space? Are you going out of town? Do you expect to make a profit on your property?
Because the market has shifted, potential buyers have more power than in recent history. If you’re selling your home for a profit, you may want to rethink your motives.
“What we forget and almost don’t want to think about is how challenging it will be to buy on the other side,” Watson says.
A few months ago, you may have seen multiple bids on a property and been able to sell well above your asking price. Now the current landscape is very different. With interest rates rising, buyers are more cautious in their approach to buying homes.
“Sellers have actually kind of woke up to the realization that you can’t guarantee a sale,” Watson says.
1. Timing isn’t everything
Timing the real estate market is a gamble. Anticipating market trends is like playing the lottery: yes, there will be winners, but there will be very few.
If you’re considering selling a home, don’t let making a profit be your primary motivation. Sell according to your personal needs, and if you make money, consider it a bonus.
“We have individuals committed to buying new construction, buying real estate with confidence from sales, who are struggling a little bit now,” Watson says. “And we’re even seeing people re-sell homes for less than they paid, probably tied to this affordability challenge.”
Trying to play in the real estate market can lead to further disappointment and frustration, especially if you bought a new home before selling your current one.
When the market was warm Watson saw “the confidence to buy wasn’t there, but the confidence to sell was there and that caused people to do something that in my mind is the no-go zone, which is buy before you go.” sells without confidence in your finances.”
Due to the cooling of the market, houses stay on the market longer and are sold for less than before. Buying a new, more expensive home before selling your current home may mean that you have to float two mortgages for a while or that the financing of the new home does not go through.
“Have a plan in place on how you’re going to close that property in case we can’t sell your house,” Watson says.
Having a clear value of your home and adjusting the selling price accordingly can save you headaches. If you’re trying to sell your home in a refrigerated market, don’t expect to get multiple offers or sell above the asking price.
Watson notes that when selling a home, it’s important for sellers to be aware that problems can arise when closing a sale.
“It’s now more important than ever to really understand the buyer’s financial strength. So that can get in the way of a nice big fat build-up. But also insight into the financial strength”
2. Change your expectations
If you’re selling your home, you’ll need to consider changing attitudes to home sales. While the demand is still there, brokers have witnessed a marked shift in the market.
No longer are their lineups to watch houses and extreme bidding wars on houses. Instead, there seems to be some stabilization.
Sellers are seeing fewer bids, with nowhere near asking prices.
“It’s just adapting to change,” Watson notes. “Recognise [that] in a balanced market you don’t see much price growth, right? So where you saw your neighbor selling maybe $100 or $200? [thousand] higher in some areas… you can’t expect that, because that was the product of a very, very tight seller’s market, which we’re not in anymore.”
3. The value of a home inspection
When the market was warm, there wasn’t much room to negotiate when buying a home.
“In the heat of the market, we’re looking for at least five or ten multiple offers and no terms,” Watson said. “In the hottest areas, we saw that the financing conditions were gone. The conditions for home inspection had all but disappeared.”
“I think there [were] many properties with problems sold and buyers just accepted.”
Alan Carson, founder and CEO of home inspection company Caron, Dunlop and Associates, has seen how the housing market impacted the number of home inspections.
“Between COVID-19, low interest rates, panic, bidding wars…demand for home inspections among buyers has remained high, but the opportunity to get a home inspection has dropped dramatically because it’s a crazy seller’s market,” said Carson.
“Buyers were pressured not to put any conditions on their offer, including for home inspection,” says Carson.
As a seller, you can use a home inspection to your advantage. Having a home inspection done before you list your home for sale, and including the report for potential buyers to see, will help you establish a firm asking price for your home. Because the buyer will not be faced with surprises, he has less room to negotiate the final price.
As we come out of a hot market, it’s important to think about what a more balanced housing market will look like. When preparing to sell your home, keep in mind the buyer of the property as they will ultimately have more power than they have in the recent past.
This article provides information only and should not be construed as advice. It comes without any kind of warranty.