In the Central Okanagan Real Estate zone this December, new listings decreased 11% and unit sales increased 33% compared with this time last year (stats here). This has been a relatively consistent trend over the Fall and Winter of 2013 with inventory dropping and sales increasing. This trend shows our real estate market “re-balancing” after years of stagnation and suggests that we are moving toward a Sellers market.
Given that Buyers have “ruled the roost” for so long I thought I was important to revisit some important things for Buyers to remember as the market momentum picks up:
- Get pre-qualified, talk to your Mortgage Broker first to lock in a rate, and know what you can comfortably afford. Interest rates will rise; an early rate hold in a fast rising market can save a Buyer hundreds of dollars on a monthly mortgage payment.
- Negotiations will have a sense of urgency in a Sellers Market, so do all your homework first (before you start viewing any homes in person):
- Get your REALTOR to start a “Activity Alert” for you for all relevant listings in your top neighborhoods – this will give you a sense of what the homes are selling for and how fast they are selling;
- Have sufficient funds in the bank for down payment, moving and closing costs (ideally about 9-14% of your intended purchase price being 5-10% down on the home, plus 2% estimated moving and 2% estimated closing costs)
- Negotiate on price, but leave sufficient time for due diligence;
- Due Diligence is the process of “kicking the tires” on a residential property and looking at the quality and suitability of premises. No matter how intense the negotiations are, Buyers should always leave time and have subject conditions in place to:
- Finalize a Mortgage Commitment;
- Do a Home Inspection;
- Review the Land Title with a Lawyer;
- Review the Strata Documentation (if applicable);
- Many negotiations will be competitive, and a good, experienced REALTOR makes all the difference here, but remember:
- It’s okay to “lose” on a house if you are not 100% comfortable with the deal, “winning” a competitive bid is not like winning the hockey game, its “winning” the right to pay for an asset for the next 25 years of your life.
- Its way easier to find another good house than it is to find a good spouse… yes I am serious… there are lots of good houses, there are lots of good neighborhoods, seldom is there only “one house”.
- Final point: Don’t assume the good times will last forever. Lots of people learned this lesson the hard way in 2008 buying pre-sale contracts they could not afford. Real estate is not considered to be a “liquid asset” and you cannot simple sell it with a click of a button. If you sign a real estate contract, plan and expect to close the deal.
Written by Kelowna Real Estate Lawyer Peter Borszcz