Prices are high, inventory is low, and there are multiple offers for over asking price for nearly every home that sells. We are, without a doubt, in a seller’s market.

This is a challenging market to be in for any buyer, whether you’re a long-term investor or a first-time home buyer, the complications are the same. 

The Canadian real estate market is hot, in particular, the Vancouver Island and Greater Victoria area.

If you’re looking to purchase a home in this area you need to be prepared well in advance.

Here are a few tips on how to buy a home in a seller’s market: 

Pre-Approval

Pre-approval is a must-have when purchasing a home in a seller’s market.

Knowing the amount which you can afford to spend on a home will allow you to make offers accordingly and stay within your budget.

Also, many sellers will turn down an offer that doesn’t include pre-approval. They see this as a risk that the deal may not close as scheduled and they would prefer to have a ‘done-deal' regardless of the amount offered. 

Be Prepared for Bidding Wars

A seller may receive numerous offers which in turn, gives them the negotiating power. In this case, be prepared with your counteroffer if you really like a home and don’t want to miss your opportunity.

Searching for homes below your max budget will ensure you have room to increase your offer and give you more opportunities to get the home of your dreams in the case of a bidding war.  

Make Strong Offers from the start

Putting in a strong offer from the start will give you a better chance than you’ll have in a bidding war.

Wasting your time with low-ball offers in this market will only work against you.

Come in strong from the start and remember, unconditional offers are a seller’s preference. If you’re able to make a strong offer with no conditions, your chances will increase substantially. 

Write an offer letter

A handwritten letter submitted with your offer may not win you your dream home. However, if it comes down to 2 or 3 offers that are close in price, your chances will increase greatly with the added personal touch.

Tell the seller why you like the home so much, what your plans for the home are, and how you envision you and your family making memories here.

If you’re a first-time buyer, advise the seller of the struggles you’ve faced in your attempts to buy a home in such a hot market, also let them know why you’ve fallen in love with their home.

While all sellers do want the best price for their home, not all of them are so focused on the almighty dollar. Many sellers want to know the home is going to be taken care of and enjoyed by the new owners.

A letter doesn’t guarantee you anything, but it definitely won’t hurt your offer! 

Expand Your Search Area

Expanding your search will give you access to different styles of homes, neighbourhoods, and opportunities.

Looking into new builds on the outskirts of the city or other property types is another way to expand your home search in a hot market.

If you’ve been looking for a detached home, but everything in your area is receiving dozens of offers, a large townhouse might be something you’d be open to considering.

Your dream home may just be sitting an extra 10-minute drive away!

Work with a Trusted Real Estate Agent

A trusted agent can help you in difficult situations. They have the experience, knowledge, and know-how to handle a Seller’s Market and will advise you accordingly when it’s time to back away from a home or to increase your offer.

Working with an agent you trust also means you won’t be touring homes that aren’t in your budget or to your liking. They may also be able to present properties to you that are not yet listed or new neighbourhoods that are in the planning stages and not publicly marketed. 

Buying a home in a seller’s market can be extremely challenging, however, these tips should help to ensure your offer gets noticed and that have the best opportunity to close the deal. 

You’ve likely been told that making a few extra mortgage payments each month is beneficial as you’ll pay your mortgage off faster and save thousands in interest.

However, instead of making extra principal payments, a savvier choice could be to put that money to use elsewhere — it all depends on your unique financial situation.

Yes, having a mortgage does mean you’re in debt, but it is often considered “good debt” because it’s backed by a tangible asset with real, growing value.

This means, if sell your house tomorrow you will immediately pay off your mortgage, however, this is not the case with other types of debt, such as credit card, student loan, or car debt.

Here are the top 5 reasons why you shouldn’t make extra mortgage payments: 

High-Interest Debt

Rather than paying down your mortgage which has an extremely low-interest rate, use the funds to pay down your high-interest rate debt.

While the amounts may be smaller, the interest rates are surely higher than your mortgage rates and due to compounding, high-interest debt just snowballs into a bigger and bigger number the longer you wait to pay it off.

Retirement Savings

If you haven’t started saving for retirement yet, or you’re not maxing out your annual retirement contributions, you may want to prioritize that over making extra mortgage payments.

Saving for retirement also includes compounding interest, however, unlike debt, savings compounding will assist in growing your money.

Your money will grow by leaps and bounds in these retirement accounts while, at the same time, your house will be appreciating in value, a financial win-win situation! 

Annual Tax Bill

If you’re not making monthly payments towards your taxes, you may want to save these funds for your annual tax bill.

Property values are increasing every year and with that comes tax increases. You want to be prepared to pay any higher tax bills each year. 

Emergency Fund

If you’re like most people, your savings fund was depleted when you purchased this home.

Rather than make an extra mortgage payment, build up that savings account again. If your furnace breaks in the middle of winter or your roof starts leaking in the fall, you’ll be extremely grateful that you have these extra funds to cover the costs.

Moving Soon

Moving is expensive, even if you’re making a large profit on the sale of your home.

You’ll need to pay, in advance, for inspections, repairs, maintenance, and much more before listing your home.

Having a nest egg of savings to cover these costs or to make your next down payment will be a lifesaver when the time comes. 

Paying your mortgage off as fast as possible is something we all strive for, although, ensuring you’ve taken care of all other financial aspects in your life first may make more financial sense in terms of interest rates, savings, emergencies, and such. 

Real Estate commissions can be a little unclear and confusing and we want to clear that up.

Many buyers and sellers are unsure what they are actually paying for, so we’ve put together this list to review the main costs, covered by the realtor, to explain what your funds are going towards.

Brokerage fees

The majority of brokerages charge a 50% fee on all commissions.

This covers administrative costs, some marketing, advertising, and some signage.

As each brokerage is different, so will be the fees and services included, but for the most part, you can expect that your agent is paying the brokerage 50% of the commissions they’ve earned.

Photos and videos

Professional photos, video tours, and drone videos are at the sole cost of the agent. This often also includes costs associated with staging your home.

Hiring a professional photographer will ensure your home shows its best and is marketed first-rate, gaining the interest of as many buyers as possible.

MLS, Real Estate Board, Licensing, etc.

Realtors using the MLS system are required to pay an annual fee. MLS is the most well-known home searching website and your agent will need access to this to ensure a quick sale.

Realtors are also required to pay licensing and insurance fees, which are renewed every 2 years.

Additionally, agents need to pay annual dues to their local real estate board and are required to complete numerous educational courses, at their own cost, each year to ensure their license remains in good standing.

Advertising

Any additional advertising by your agent will be at their costs. If your agent offers to advertise on their social media pages, they are likely paying a social media manager or using plenty of their free time to ensure your listing is shared as widely as possible.

Signage

While some brokerages offer signage, not all of them do. And if your agent wants personalized signage, this will come at their cost.

A simple sign can cost upwards of $150, this would not include any additional text, logos, or photos. 

Additional costs

Many realtors will create flyers or brochures to hand out at open houses or around the neighbourhood, the time spent to create these, printing, and distribution are all at the sole cost of your agent. 

While it may seem that agents are making extremely large commissions, they are also extremely high expenses, and we haven’t even touched on paying taxes, employment insurance, etc.

There are countless costs that your agent will need to pay on a per listing, monthly or annual basis that you may not be aware of. It’s always best to have a conversation with your agent about the costs in advance so that you’re aware of everything upfront. 

Saving money for a down payment on a home can be one of the most difficult things to do. It takes an immense amount of discipline and often includes making numerous sacrifices.

If you are already paying a mortgage on another home or paying rent, the process can be even harder. Thankfully, there are plenty of ways to save, some that you may find quite surprising, and others where you may need to make some lifestyle changes.

Whether you’re a first-time homebuyer or a long-term investor, these tips can help you to save for a down payment. 

Subscriptions

Automatic payments can be easily overlooked or forgotten about.

Sit down and go through all your recent credit card and bank statements to get an in-depth look at where your money is going.

Cancel monthly subscriptions that you do not use or need and change your monthly plans to more affordable options, if possible.

A few dollars of savings on each canceled account can add up quickly and you’ll be surprised with how much you can save each month.

Affordability

Knowing how much you can borrow to purchase a home will help you determine how much you need for a down payment.

Seek a financial advisor, lender, or mortgage broker to review all your finances and assist you with the pre-approval process.

This process will also give you an idea of how much you can expect to pay each month when you do purchase a home, inclusive of mortgage payment, taxes, insurance, and any condo/homeowner fees.

Start a Down Payment Fund

Set up a TFSA or RRSP account with your bank where the funds will be saved and you can easily make monthly contributions.

Resist Temptation

Set a timeline to save your down payment and stick to it.

It may be very tempting to see the funds growing in your bank account and you feel the urge to treat yourself to something, but this will only set you back and extend your deadline.

Stay focused on your end goal and know that buying a home will be the ultimate gift to yourself.

Less luxuries

With saving always comes the sacrifice of a few less luxuries.

Instead of going out for dinner every weekend, start cooking at home, this can save hundreds of dollars each month. 

Pack a lunch to take to work and you can save about $15 per day. Make your own coffee and skip the daily trip to Starbuck and you can save upwards of $150 per month.

Be aware of the small luxuries that you’re spending money on and try to find ways to work around them. You don’t want to give up all the things you love in life, you simply need to find a new and affordable way to enjoy them!