How’s the market in Vancouver? When the market softens, smart buyers see opportunities and start to reevaluate their offer strategies. In this episode, Adam and Matt extol the ten commandments for buying real estate in a buyer’s market in Vancouver. Learn the top ten secrets to buying in a buyer’s market in a city that usually favours sellers. Hallelujah!
Vancouver Real Estate News, Market Updates, Insider Tips, Stats, & Analysis
- Honour thy ducks and line ‘em up. Get your ducks in a row. When the market’s really hot, you’re competing with other buyers and need to get your financing in order before going to offer. This way, you know you can go subject-free, or maybe just a day or two for conditions. Pre-read documents like title and strata ahead of time, so the offer isn’t contingent upon them. Finally, do a walk-through (whether it’s an inspection, pre-inspection, or red-flag walk) with someone you trust to look for big issues. If you take these hot market practices and apply them to a cooler market, there are huge opportunities – especially when going in low. Many recent offers of around 8-10% under asking price have 10 to 14-day financing subjects. People are already looking for reasons not to buy real estate so, as a seller, having your property tied up for that amount of time is brutal. As a buyer, you’ll have a much better chance of getting your offer accepted with no, or shorter, subjects—some sellers may even accept a price below asking just to sell quickly and be done with the task faster.
- Thou shall covet distressed properties, distressed sellers, and distressed realtors.
Distressed properties include:
- Foreclosures, where someone lapses on payment and the bank sells their property.
- Estate sales, where, say, someone passes away and their kids sell it to get the money out as fast as possible. Often, these properties are old and in original condition. If a property is in poor shape, you can take advantage of getting it at a low price because the seller did not take the care to prepare it for market.
- Forced strata sales, where the strata forces a sale because, for instance, an unpaid maintenance fee has added up and the owner is unreachable.
People target distressed properties both in hot and cool markets.
Distressed sellers. How to target distressed sellers in 2018? These are people with yesterday’s price who have been chasing the market down (re-listing constantly throughout the spring with reduced prices coming into the summer, or they constantly remove and add their listing back. They are very motivated to sell and have some fear and anxiety about selling. Focusing on the media or books. This isn’t in favour of keeping the market buoyant. If they’re scared, this is where a low offer comes in.
Distressed realtors. These are realtors who, for instance, take unprofessional photos on their phone. They’re not doing their job or marketing in such a way to get people through the door. They’re not organized—they don’t have the documents they need or know the property well. Matt and Adam have even seen upside down photos on MLS listings!
TIP. Seeing no photos on a listing doesn’t necessarily mean the property is a dud. Maybe the seller didn’t want to pay for photos, they launched the listing in a hurry, or their tenant wants privacy. These listings are still worth exploring and could be great opportunities, as many people won’t bother.
- Patience is a virtue. When markets rise from, say, 3-5% per month, patience is definitely not a virtue. However, right now buyers are in the driver’s seat of our market. Don’t let the seller or any realtor pressurize the situation—there will always be other properties. Let counter-offers expire; leave them for a couple of days. If it sells, you will find something else. Unless it’s your perfect property, be willing to lose it as this is when you’ll get the best price.
- Thou shall not get emotional. As Brad Lamb says, when you sell a property, you want to sell to an end-user. They have to get emotional, as it’s their home. But as a buyer, you must mitigate this as much as possible—if you’re emotional, you will be too involved in the property and will overpay. Investors look at a potential purchase and make a calculated, financial decision. Buyers see the same thing and think about where their furniture goes and how they love the patio and view (remember, this discussion is about getting a deal, not finding your dream home).
- With offers, all things are possible. Get an agent who’s committed to you and will write many offers on your behalf. You have to test properties. This is how you find out if the seller is motivated. Don’t wait for price drops or worry about how long the property’s been on the market and if the seller looks desperate. If you wait, someone else could take your opportunity.
- Price is not thy king of kings. You want to negotiate on several fronts. Write your dates, long subjects, and price. It’s not just price that gets negotiated. By conceding on one point, you can use it to leverage another (for instance, “We’ll give you your dates if you give us our price”).
- Guide us to thy perfect price. People don’t know where they want to land, but they still write an offer (this is like driving to an unknown destination). Structure your roadmap to get where you want to be—start the negotiation at a point where there’s enough room to go up to your actual price. And don’t worry about offending people—this is a business transaction; people should not be offended unless you’re being ridiculous (which is not what this is about). Be rational and reasonable—create a dialogue by being strategic based on the numbers and understanding the value and opportunity.
- Never be afraid to walk away from a deal. This could be for any reason, such as someone getting offended or trying to pressure you into a quick decision. Don’t play by the seller’s or their agent’s rules. These are big transactions, especially in Vancouver!
- Focus on David, not Goliath. Separate the strong markets from the weak markets, and operate in the weak markets (where the sales ratio is really low and there’s high inventory) to get a real deal. Go after David! Get to know the stats. The media talks about the Canadian and Metro Vancouver markets – but you need to focus on sub-markets (for instance, Kitsilano is the strongest market on the West Side; Kerrisdale and Southlands are not performing as well).
- Be realistic: Vancouver is thy holy land. Vancouver is a great city, and though there will be stronger and weaker markets within it, people will want to invest and live here forever. Look at the long-term trends, from five all the way to 50 years—appreciation is nearly off the charts! Real estate goes up, has a run, balances out, and might moderately decrease. Then, it comes back higher than it was at the previous peak. So, you want to “time the valley” and ride it back up to that next peak. But all in all, it’s a great city and buying Vancouver real estate for a long-term hold is a great Now is a good time to buy; you can use subjects, and time and control are on the buyers’ side. And it’s amazing how fast the conversation changes: over the past four to six months, people have said our best days are behind us. This is always a sign to be buying!