First time condo buyers are seeing intense competition happening. Entry level condos are selling within days. Final selling prices are going above asking. And some buyers are removing conditions just to get their chance at buying the condo.
As prices of freehold houses throughout the Greater Toronto Area continue to rise, condos are becoming an even more popular alternative. Not that they weren’t a choice a few years ago. Even Scarborough condos get snapped up in a day or two.
What’s a condo buyer to do in this intense marketplace?
Tips for first time condo buyers
If this is your first time buying a condo, you’ve got to change your mindset. In order to get the condo you want especially in a multiple offer situation, you’ve got to go beyond the norms of buying a condo.
What does this mean?
Know what you want
When you go condo hunting, know specifically what you want. Determine what it is you absolutely want to have in a condo, and what are some things you’re prepared to be flexible on. Yes, you want parking, but do you need a locker? You’re vying for a two bedroom, but will a one bedroom plus den do? Does your master bedroom absolutely need a walk-in closet?
Be clear on what it is you are looking for. When you find it, you’ll be prepared to move forward, quickly, with an offer.
Speaking of being prepared, it goes without saying that you should have all of your finances in order before even going out to look for a condo. Do you have a pre-approval for a mortgage? Or, if you don’t need a mortgage, do you have cash prepared to buy your condo? Do you have enough for a deposit when you make an offer, typically 5% of the purchase price? Do you know all of the closing costs and expenses, and have you budgeted enough money for it?
With fierce competition amongst condo buyers, those who are better prepared have a much better chance at getting the condo they want. The reason is simple. They have more confidence and greater ability to move forward.
A few years ago, you could ‘sleep on it’ and the condo will still be available a day, or even a week, later. In Scarborough, condos used to sell between 30 to 60 days — 30 days being an amazing time period and the norm would be about 45 days. In today’s market, you need to see the condo the very day it is listed, or you might end up seeing it while offers are already on the table.
If you’re working with a Real Estate Broker, make sure they know what you’re looking for. The moment it comes to the market, set time aside immediately to have a look at it. Don’t miss the opportunity. Act fast or you’ll have to wait for another one to come around.
I might sound like I’m contradicting myself, but I strongly believe first time condo buyers should only make an offer if you really like the condo. And if you see yourself living there for the next few years. Never settle. Sure, competition is intense, and listings are scarce. And you may not get the exact same condo you’ve just seen. But if you don’t like it, make sure you’re prepared to lose it while seeing if another better one comes to the market.
And yes, others will come to the market. It may take a while, a bit of searching, and a lot of patience, but trust me — another condo will come to the market. When you do find the one you like, pounce on it.
Think outside the box
Your lawyer and mortgage broker will disagree with me on this, but the difference between them and me is that I go through the process of multiple offers in person in real-time, not after-the-fact. If you want to win in a multiple offer situation, there are essentially two things you need to do have:
- The highest or best price (best depending on conditions)
- The fewest or no conditions
The highest price doesn’t necessarily get the condo every time. Sometimes, a slightly lower priced offer with fewer or no conditions will get the condo.
I strongly advise you to check with your lawyer and mortgage broker about conditions — financing, inspection, status certificate. Typically, you can win a multiple offer on a condo with just the status certificate condition, but understand the risk of not having financing and inspection.
At the same time, understand that depending on the number of offers a condo has, your chances of getting that condo diminish with conditions and a low price. This is just the reality of today’s market.
Could it change if the seller’s market shifts to a buyer’s market? Definitely. But if you want a condo today, this is a reality you face.
The winter season is coming up. Listings typically become more scarce. But ahead of mortgage increases and amidst mortgage rule changes, I see continued increasing demand for condos especially amongst first time condo buyers. Keep in mind, you’re also competing against buyers who are downsizing from a house to a condo. And people moving from out-of-town into Toronto.
Get in touch with me if you need help finding a condo.