If you’ve been following the headlines, you know that the Toronto real estate market has experienced a significant shift over the past few months. The red-hot seller’s market has turned on its head. Suddenly, homes aren’t selling nearly as fast as they were, or for as much.
Whenever there’s a newsworthy event, there are sure to be a lot of myths and misconceptions floating around.
Today we would like to clarify some of the misconceptions that buyers and sellers may encounter.
Most Common Seller Misconceptions
Setting a higher list price will help me sell my house for more.
Some homeowners may think setting the price artificially high is the secret to making more money by allowing the buyer to negotiate. However, this tactic has never helped. It especially won’t help during a slower market. If your price is too high, there’s no room to negotiate – because you’ll have no one to negotiate with. Buyers will simply move on to the next house.
You’ll be waiting for the phone to ring, and eventually, you’ll be forced to lower your price. And if your house sits on the market too long, you’ll end up dropping it even more. Getting the initial price right is possibly the most critical thing you can do to maximize your sale.
Here are some more resources to help sellers navigate through an uncertain market:
- Is The Market About To Shift?
- Your Quick Guide To Real Estate Marketing
- How To Sell A Home With A Busy Family Life
I can make more money without a real estate agent.
Many home sellers are tempted to forgo the help of a real estate agent, and it’s easy to understand why. Commissions make up a significant portion of the closing costs. If you sell independently, you don’t have to pay.
However, you save nothing if you make $100,000 worth of mistakes. Real estate transactions can be complex at the best of times and are even more so when the market changes. A professional real estate agent will guide you through the process, ensuring everything is filed correctly so your sale doesn’t fall through at the last minute.
Plus, they will help you increase the value of your home through strategic renovations and negotiating with potential buyers.
My Toronto house is guaranteed to sell.
This is a dangerous misconception. Even during the housing boom, we would hesitate to say anything was guaranteed. And now everything has changed. Some houses are still selling quickly. Others sit on the market with no buyers and eventually have to be relisted.
Successfully selling during a shifting market requires a full-time effort. Your house needs to be in tip-top shape. You need a comprehensive online and offline marketing strategy to reach the most targeted buyers. Even if you do everything right, selling your house may take longer than you realize.
I can expect multiple offers and no conditions
Multiple and unconditional offers have been so frequent over the last few years that many sellers believe they are normal. However, these market conditions are far from typical.
As the market continues to balance out, we are starting to see fewer multiple offers. In addition, there are enough listings available that buyers can once again protect themselves by adding conditions to the sale.
I need lots of renovations before I can sell my home.
Every seller wants to make a stunning first impression on a buyer. Some updates can help add thousands of dollars to the value of your home. However, many projects are prohibitively expensive and won’t add a dime to your bottom line. For example, you might love the idea of a sunroom and spend two months and tens of thousands of dollars building it. But your buyer might have a different opinion.
Their first thought might be to rip it down and build a deck. Even worse, they’ll factor those costs into their purchasing decision. They may offer much less than you want for your home or walk away altogether. That’s a lot of work down the drain for no reward.
The best way to avoid this scenario is to consult with a local real estate agent. They can help you determine which renovations are worth making so that you maximize the sale of your house with minimal investment in time and money.
Misconceptions Buyers Face
Sellers aren’t the only ones who need to be aware of the many misconceptions floating around. Buying a home is confusing at the best of times. Now that the market has shifted, you might have a thousand questions going through your mind. On paper, this may be the best time to buy property than it has been for two years. However, you still have to factor in your finances and long-term goals. Here are some of the frequent misunderstandings buyers have about the current market.
I should wait until prices come down.
Many people who bought during the market peak are now experiencing tremendous buyer’s remorse. If only they had waited, they might have saved tens of thousands of dollars. As a result, many prospective buyers are hesitating to see if prices fall even further. It makes sense, given how hard the market has been hit over the past two months.
However, there is no guarantee that prices will come down much more, if at all. And property values tend to rise in the long-term, even if they have dropped for the time being.
Timing the market just right is nearly an impossible feat. It’s much better to decide when the time and opportunity are right for you. Are you ready for the responsibilities that go along with owning a home?
Do you have sufficient funds to get you by in an emergency, and can you afford the monthly payments even if interest rates rise again? If you have the resources, now is an excellent time to buy in Toronto.
Do you have more questions about buying or selling?
The list price is what I’ll pay.
Very few home buyers factor in the actual cost of buying a home. It isn’t just the list price. If you end up in a multiple offer scenario, you might have to bid well over the asking price to secure your home. Even then, there are numerous closing costs to be aware of, including HST on new builds, lawyer fees and land transfer taxes.
Before placing offers, talk to your real estate agent and financial advisor so you’ll know exactly how much you’ll need to buy your dream home.
Buying a home is an investment, so it’s okay if I overspend.
Buying a home is an exciting milestone, but it is only the first step. The next and more challenging step is keeping the home. No matter how much work the previous owner put into the house, you will undoubtedly have some repairs and renovations to make it suitable for you.
And life happens. Unexpected expenses can often arise at the least opportune times. It’s always advisable to have a financial cushion when buying a home and stay under budget if possible.
A fixer-upper is a great way to save money.
The soaring price of Toronto real estate has many people looking for creative ways to make buying a home more affordable. Many people think buying an older, out-of-date home is a way to save money. And for the right person, it can be. If you’re handy and don’t mind the extra work of making extensive repairs, a fixer-upper might be perfect.
However, don’t underestimate the cost of raw materials you’ll need to mould the house into what you want. In addition, consider getting a home inspection before committing to your purchase. It’s one thing to fix some holes in the walls and replace old, worn-out doors.
But if the home has severe structural issues and a crumbling foundation, the cost of repairs can quickly negate any savings.
I don’t need a real estate agent to buy a house.
Technically, this is true. The listing agent will be more than happy to sell you a house. Keep in mind, however, that they are there to represent the seller, not you. With a buying agent on your side, you have an expert to help you navigate home inspections, negotiations, offers and the closing. A buying agent can guide you around the neighbourhood and provide you with multiple homes to choose from. Best of all, you don’t have to pay a commission because the seller covers those costs.
Do you want some one-on-one advice from a professional real estate expert? We are happy to help. You can sign up for a free meeting with us below.
