RE/MAX Finest Realty

Buying Tips

Tips for Buying a Home in Ontario

If you have been following the Canadian housing market closely, you must have noticed the massive shift and relocation trend with buyers going for small cities in the Maritimes and Prairies. The ongoing low supply of homes coupled with record-low mortgage rates has all created a cutthroat market for buyers across the nation. RE/MAX Canada and other leading real estate agencies anticipate steady growth in housing prices in 2021 and beyond. 

That doesn’t mean house buying shouldn’t be an exciting experience anymore. It only means that you will need to be smarter, patient, organized in terms of finances, invest wisely and keep yourself updated with market prices. Of course, it can be an overwhelming experience if you are not sure what you want or not ready to bend your wish list.

Not sure how you’re going to win your bidding war? Here are our exceptional tips for buying real estate in Ontario.

Evaluate your budget and priorities

Before you begin your quest towards a home purchase, you need to consider basic facts like your finances and family size—generally, the bigger the family, the bigger the house. Additionally, if you have children, you might want to think twice about the neighbourhood and the proximity of a school, park and shopping centre. 

RE/MAX Canada anticipates average residential prices to increase from 4% to 6 % in 2021. Market activity across Ontario is estimated to go higher, with average sale prices moving between seven and 12 percent in regions like Kingston 10%, London 10%, Hamilton-Burlington 7%, Kitchener-Waterloo 7%, Thunder Bay 10%, Niagara 12%, and Cornwall 10%. 

With shifting trends and people looking for homes with better features like larger spaces, back yards and beautiful neighbourhoods, very few properties across the cities meet these standards. For instance, if you are looking for a 4-bedroom house with a big backyard and garage around Kingston, there will likely be a number of other people looking for the same house with the same features. That will mean upping your budget and reviewing your needs, or you will end up getting outbid all the time.

Learn what homes are selling in your desired location

Some sellers in Ontario will lower the asking price to generate more bids and create more interest. In an industry where supply is low, and demand is high, there is nothing like low rates. Similarly, the asking price in Canada’s real estate industry is often of no use—it’s just an offering entry into the market. It may have nothing to do with the actual value of the property. Armed with this knowledge, you need to familiarise yourself with the market and view multiple homes and know their features. 

An experienced realtor can also tell you the price range of similar properties in the area you’re interested in. Knowing what features your money can buy motivates you to bid more aggressively. Cities such as Hamilton-Burlington have had a massive spike in demand for luxury homes in the past year, a trend that is also expected to continue and catch up with other cities. 

Don’t expect a quick win in your bid, and wait for your realtor to provide you with local listings within your targeted location.

Looking for a New Home?

First-time buyer? Upgrading? Downsizing? No matter what the situation our team has you covered. Let us work with you to find you the perfect property.

Looking to Sell your Home?

Wondering what your property is worth in this market? Talk to a RE/MAX Finest Agent today and get an informative assessment and plan to get you the best possible price for your property.

Re-evaluate your wish list

According to the Canadian Housing 2021 march report, further price escalation in January, February and March, home buyer prospects have become more challenging. Smaller markets continue to lose their affordability advantage, which has added an extra dose of stress to buyers willing to move to rural areas to find affordable homes. If you have a fixed budget, you’re likely to get frustrated every time you get outbid. As heartbreaking as it might feel, rethinking your preferred home location, size, price, amenities, and features may be the best option. 

Real estate is a trade-off like most things in life. Don’t let a good deal bypass you simply because you found the balcony too small. Price may not be a variable if you have a fixed amount, but you can always choose a smaller home with fewer bedrooms or a smaller parking lot. The idea is to have both negotiable and non-negotiable features. Discuss them with your partner, create a list and share them with your agent.

In some situations, you may be able to increase your budget by revisiting your mortgage application. The Canadian banks are quite conservative when it comes to issuing mortgages. If your debt-to-income ratio is too high, you may not qualify for a mortgage. For instance, if you have a car loan, student loan, and credit line, you may not qualify for a mortgage. Your only option will be to use your savings to offset some of the loans and re-apply for a mortgage. By lowering your debt-to-income ratio, you are opening more room for borrowing.

Make unconditional offers if possible.

In a market where sellers dominate, always keep in mind that there are other buyers eyeing the same property you intend to buy. Your offers will likely have to be unconditional to be competitive—there is a simple reason for it. Why would a seller select a conditional offer on a buyer seeking to obtain financing or getting a home inspection done when there is a wide selection of unconditional offers?

That means you need to seriously think about financing before bidding, and if you need a home inspection done (which is highly recommended), you need to do it first before placing a bid. It is even better to conduct the inspection yourself, considering that home inspection is more of an art than science, where opinions may vary.

A growing number of potential home buyers skip this critical step in a rush to own the house. Inspections highlight any structural issues and costly repairs, which you can negotiate with the seller or pull out if the agreement is not reached.

Don’t throw everything at a home

It’s pretty easy to get carried away and use everything you have to buy a home you don’t want to lose. Buying a home in a hot real estate market means prices are generally higher than usual, but that doesn’t mean you risk all you have to own a home. There is a possibility that the home could be overpriced especially if your mortgage lender appraises the house value below your purchase price as they will look at the past three months’ prices on similar properties to determine value. 

Remember, Canadian banks will only lend you up to 80% of the appraised amount. If you shop at the peak of your budget, you’re likely to end up in a default situation. For instance, let’s say you have been approved for a $1 million mortgage and have a $500,000 down payment. You go ahead and bid on $1.5 million property, and your offer gets accepted. If the bank appraises the home to $1.2 million instead of 1.5, they will give you $ 960,000 (80% of 1.2m) even though you were preapproved for a $ 1m loan. If you don’t get mortgage insurance to cover the difference, you will need to look for an extra $40,000. If you don’t close the deal, you will not only lose your deposit but could also be sued for damages if the home sells for less than what you offered. 

Another common reason to stick to a reasonable budget is that there is no guarantee your new home will appreciate. While market experts predict the Canadian housing prices will continue to skyrocket, nobody really knows tomorrow. If you bid too high and prices fall, you end up owing more on a home that isn’t worth it, leaving you with negative equity or an underwater mortgage.

Act quickly and don’t give up.

The Canadian real estate market is heating both big and small cities, and home prices are quickly becoming unaffordable for most Canadians in major urban centres. The National Bank Report found that medium-income households in more than ten major metropolitan areas across the country will need to save more than 10 % of their pre-tax earnings for about five years to get a minimum down payment on a medium-priced home in Canada. The widening gap between the haves and have nots is slowly killing many people’s dream of ever owning a home.

However, that doesn’t mean you should give up. If you have the funds, consider sacrificing some features or lower your expectations to lock in a deal. Have everything ready and pay for your home as soon as possible because, at any minute, someone else may snatch your potential home from you. A little patience also won’t hurt.

Looking for a New Home?

First-time buyer? Upgrading? Downsizing? No matter what the situation our team has you covered. Let us work with you to find you the perfect property.

Looking to Sell your Home?

Wondering what your property is worth in this market? Talk to a RE/MAX Finest Agent today and get an informative assessment and plan to get you the best possible price for your property.

Check out our buyers guide


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