I’d like to take this opportunity to send you and your family all my best wishes for a safe and prosperous new year. May all of your hopes and dreams come to fruition this year. To all of my clients, I look forward to getting back out there and helping you find the right investment property. As always, it likely won’t come easy, but if we work hard and persevere, I’m sure we will be successful. My mother used to say to me “If you move your legs, God will give you speed”. So let’s all move our legs and great things will happen.
Next month, I will share my annual year-end wrap up of income property sales in 2012, broken down by Toronto neighbourhoods. We will also look at how the market has started off in January so we can try and pinpoint where things are headed for the rest of this year.
As we start this New Year, the Toronto income property market is poised to be as robust as ever. I anticipate 2013 to be a strong year with sales comparable to the last two years. There has been a lot of talk about condo sales dropping thereby signaling the beginning of a softer real estate market in Toronto. With duplexes and triplexes, I simply don’t see this being the case as this market isn’t (or has ever been) over saturated with product. When we have to fight tooth and nail at times to get these properties, it is not likely that there will be any “deals” to be found. With a finite inventory, Sellers of quality income properties will continue to command top dollar. Remember that if the market does turn, any properties that generate revenue will likely continue to be the most desirable.
If you every have any questions about real estate investing in Toronto, or would like general information on the duplex and triplex market, please don’t hesitate to get in touch with me.
In a Sellers’ market like we have experienced over the past few years in Toronto there are more buyers than homes for sale. Prices may rise, and the days a home is on the market may shorten to a week or even less than a day. Agents decide to “holdback” the offer date to try and create a feeding frenzy. Some homes will even sell before they hit the computer. That means that sellers can often expect to see multiple offers. How can you position your offer to be the one the seller accepts? The best way is to gain an understanding of how multiple offers work and how they benefit the seller. Multiple offers mean that the seller has his/her pick of offers, but that doesn’t necessarily mean a disadvantage for you as a buyer. You just have to determine how badly do you really want this particular home?
There are two things that matter to the seller – price and terms. They want the highest price possible, and the best terms available. Both of these areas leave room for negotiation. Just because a seller is entertaining multiple offers doesn’t mean you don’t have a chance. You just have to hit the right note with the seller that the other contracts don’t.
Just to give you an idea of how important terms are to the seller, let’s look at a hypothetical situation. You offer a seller the highest price for their home, but you put in the contract a financing or home inspection condition. It may seem reasonable to you, but these are terms that the seller has no reason to accept.
The seller will only accept terms which meet their own needs, so keep contingencies to a minimum. In a multiple offer situation, the seller is not under any obligation to negotiate with the first buyer who submits an offer. So, if your offer is not the first offer, don’t panic. Because the seller has the liberty of choosing the best offer to negotiate, your offer stands a chance of being noticed if it has the most favourable terms. The seller will accept the offer that best reflects his or her needs. They not only consider price, they also look at such things as financing, closing dates and possession dates. That means room to negotiate for you. Believe it or not, the highest price doesn’t always buy the home. Sellers have a number of needs aside from price; they want a quick closing, or a delayed possession, or they may wish to exclude items in the home, and so on. Any offer which puts any of these goals at risk will not be accepted.
A buyer may make the highest offer, but perhaps has not been qualified by a lender. A seller who accepts an offer from an unqualified buyer is taking a substantial risk. Should the offer fall through because the buyer fails to qualify for financing, the home will lose valuable marketing exposure and advantage. Also, the seller may have a special need that is more important to them than price. For example, a seller may have a need to sell quickly, but remain in the home for a period of time until school is out or until a transfer takes place. Your ability to negotiate on this point may be more important than coming up with the highest dollar amount. You can offer a short-term lease post-closing or offer to delay possession to accommodate your seller. You can do a number of things to get the seller’s attention – offer to pay all closing costs, to pay full price, or a little above the asking price.
How do you know how many other offers there really are? What about the listing agent’s own supposed clients who wish to submit an offer? I’ve had some of my buyers complain that they believe the listing agent is lying and only trying to push up their offer when they are told there are multiple offers. They assume that the seller is simply trying to push up the price by claiming there are other offers when none actually exist. I always like to give listing agents the benefit of the doubt and presume that everyone is acting professionally and in good faith.
Remember, you often only have one shot, so make it your best!