Top three reasons your home in the GTA is sitting on the market without any offers for too long.
You’ve listed your home for sale and now anxiously await offers. But as time passes, your home either hasn’t received any showings or you aren’t receiving any suitable offers. And now that your home has been on the market for over 30 days, you should be questioning why it is not selling and making necessary adjustments. The average days on the market, or the number of days it takes for a home to sell, is different in every area in Ontario. On average, it takes about 15 days to sell your home in Toronto. And it takes a little longer in other areas across the GTA:
Vaughan – 20 days
Newmarket – 21 days
Aurora – 22 days
Richmond Hill – 23 days
King city – 32 days
“But generally, you can expect your home to sell within the first 30 days, considering it is priced according to its market value, and your real estate agent has spread a wide net and is promoting it strategically across various marketing platforms,” says Jay Frenkel, Broker of Record at BuyRealty.ca
Not Enough Showings?
While there could be many reasons why your home isn’t being looked at or hasn’t had any decent offers, more often than not, the main reason is the price. If the price is the problem, the rest won’t carry as much weight but should be assessed and re-assessed to ensure you aren’t jeopardizing your home’s success.
Here are the top 3 reasons why your home isn’t selling:
1. My Home is Overpriced and not selling
The price is one of the most probable reasons your home isn’t selling.
It is natural to want to get the most for your home, and often sellers set the price based on their wants or what they think they should get rather than what makes sense for the current market conditions.
Today’s buyers are informed and tech-savvy.
If your home is overpriced, your buyers will know it. Even before booking an appointment to see your home, prospective buyers can assess the home’s worth using various online home valuation tools and market assessment reviews provided by their real estate agents.
Comparative Market Analysis
Your real estate agent should do the same when pricing your home. A good agent will do a proper comparative market analysis of recently sold homes in your area within the past 30-90 days (or more, depending on the state of the market).
This type of analysis helps establish a realistic and fair price range and eliminates the guesswork of what price a home will likely sell for. Neither you nor your agent can guarantee with 100% accuracy what your home will sell for. But doing a proper strategic assessment will get you close to what it’s likely to sell for.
2. Under-Exposure Due to Insufficient Marketing Can Lead to Emergency Selling
With the growth of digital media, the real estate industry has also evolved drastically – enabling access to numerous marketing and promotional tools and strategies. If your real estate agent doesn’t utilize these online platforms, it might be one of the reasons why your home isn’t selling.
Social media alone is an outstanding channel to maximize the exposure of your home to thousands of people. Your prospective buyers are on social media, and most use it daily.
Here are some staggering statistics to highlight the power of social media and what it can do to help sell your home.
Instagram has 1 billion monthly active users, and more than 500 million use the platform daily. 38% of users check Instagram a few times a day. And 500 million use Stories daily.
There are 1.5 billion active Facebook users worldwide, and Canadians are the most active ones in the world, with over 19 million users from Canada. Most check their feed daily.
As an informed and digitally-savvy home seller, you have to expect the same (and higher) level of marketing expertise from your real estate agent. To sell any product, and especially at a high price point, you have to cast a wide net with promotional strategies and leverage as many available strategies from the list below:
“With an impressive in-house marketing team, we have an inside joke here at BuyRealty.ca that we’re running a high-end marketing agency within our Real Estate Brokerage. But that’s because we recognize the impact of proper marketing efforts on the successful sale of our client’s homes,” says Jay Frenkel Broker of Record of BuyRealty.ca
3. Home selling in a Neglected Condition
While professional photos can often mask the problems within your home and attract buyers to view it, a physical visit to the property won’t be able to hide the imperfections.
If your home shows any visible damage, cracked walls, water stains on the ceiling, outdated kitchen cabinets, leaking faucets, or strong odours – your prospective buyers will see this as a “project.” And unless the price reflects the poor condition, not everyone wants a fixer-upper. Neglecting to take care of the home’s problems ahead of time might affect how long your home sits on the market.
Preparing your home for showings, fixing what needs to be fixed, undergoing minor renovations, and ensuring your home shows well can be a deal breaker.
If your home has been sitting on the market in the GTA area without any offers, it’s time to reassess your situation and understand the contributing factors to the lack of activity. Reach out to one of our agents at BuyRealty.ca, and we’ll be happy to take on the sale of your home and help you make the necessary adjustments to sell fast and with a fair profit. An experienced, resourceful and knowledgeable real estate agent is often the difference between a successful sale and an expired listing.
Mortgage financing is a crucial step to buying a home.
Looking for your dream home can also be stressful and disappointing if you don’t do three things before you begin the house-hunting and financing process:
Here we explain everything you need to know about getting a mortgage so you avoid disappointment.
Why and How Do I Check My Credit Score?
Without a good credit score, you will not qualify for a mortgage. In most cases, lenders won’t consider your application unless your credit score is 640, although some lenders will consider a broader range from 620 to 680. For those that will consider you for a mortgage despite poor credit, in most cases, you will be charged a far higher interest rate than those with good credit and be approved for less money. You will also be expected to have more money for your down payment. The only way around these challenges is to find a co-signer for your mortgage.
Mortgage pre-approval is a must for the following reasons:
You’ll know if you qualify for a mortgage
You’ll know how much you qualify for
You’ll know how much your monthly mortgage payments will be
You can lock into the current lowest rates for as long as 120 days
In most cases, you can renegotiate the interest rate at the time you buy your home should your locked-in rate be higher
You’ll begin the home buying process equipped with a budget in mind so you don’t overestimate how much home you can afford.
What is the Pre-Approval Process?
During the pre-approval process, your broker/lender will assess your financial situation, including your income, work history, debt level and any assets you own. You will need the following information:
Identification
Proof of employment, including your current rate of pay, such as a pay stub or notices of assessment from the government for taxes
Proof you can pay for the down payment and closing costs
Information about assets such as a car
Debts and financial obligations
You will also have to prove you have money for your down payment. Down payments required in Canada are as follows:
$500,000 or less requires 5% of the purchase price
$500,000 to $999,999 requires 5% of the first $500,000 of the purchase price and 10% for the portion of the purchase price above $500,000
$1 million or more requires 20% of the purchase price
Once pre-approved, ensure you ask how long the rate offered is locked in and whether they will offer the lower rate should they drop. Also, find out if they can extend your pre-approval if need be.
Where Can I Apply?
Having someone you trust and have worked with before can make the process a little easier, so many people will start with their bank branch. Your other options include the following:
Shopping at other banks
Mortgage brokers
Insurance brokers
Trust Companies
Loan Companies
Credit Unions
May requires 20% of the purchase price
One of your best bets is to work with a mortgage broker, as they have access to many different lenders and can help you find the best rates and terms.
Why Should I Shop Around for a Mortgage?
The reason either shopping different lenders on your own or working with a mortgage broker is recommended is that each lender will have different interest rates and conditions. While they offer similar products, the terms and rates are a major determinant in how much your monthly mortgage payments will be, how long it will take to pay off your mortgage and the penalties if you wish to renegotiate your mortgage contract. By talking to multiple lenders, you can decide which mortgage works best for you.
Why Are Brokers a Good Option?
The role of the mortgage broker is not to lend you the money, but instead do the leg work to help you find the best deal for your needs. They will present your best options based on your financial situation, explain the pros and cons of each and then arrange transactions without charging you a fee.
While you can work directly with individual lenders such as banks, they will only show you the products they have available. This can work sometimes in your favour as there are some lenders that do not make their products available to brokers. On the other hand, many lenders don’t offer their products directly to borrowers and instead only work with brokers. So, if you opt to shop around, starting with a broker will provide you easy access to a broad assortment of lenders best suited for your specific needs. This is important if you have challenges such as being self-employed, not having a credit history yet, or having a poor credit score.
Is it Difficult to Qualify for a Mortgage?
It can be a challenge to qualify for a mortgage as not only do you have to prove you can afford to pay the lender back, but also put all of your cards on the table when it comes to the money you owe and your credit history. The lender will consider the following in their decision:
Your housing related costs: This includes your mortgage payments, property taxes, utilities and condo fees if applicable. These costs, known as your GDS ratio, should not exceed 32% of your gross income.
Your total debt: Everything you owe at the time you apply will be tallied by your lender. They will not be willing to offer a loan for people who have a debt load that is equal to more than 40% of your gross income (total debt service ratio).
Whether you pass the “stress test” to show you can afford payments at a higher interest rate than the rate the lender approves for your mortgage contract.
What Are the Elements of a Mortgage I Need to Consider?
It is difficult to cover every type of mortgage because they vary drastically in what they offer. What you need to discuss with potential lenders includes the following:
The interest rate and how it affects your monthly payments
The term of the mortgage to see how long the contract lasts
The amortization period to determine how long it will take to pay off your mortgage
Open or closed mortgages to determine what options are available for making payments to allow you to pay down your mortgage faster
Fixed or variable interest rates to determent if you have a locked-in interest rate for the term of your mortgage or an interest rate that will change with the most current rates at the time of your payment
What options are available to help you pay down your mortgage earlier, such as bi-monthly payments, the option to make lump sum payments, etc.?
All fees associated with purchasing the home
Types of insurance available and their cost
Penalties for the various conditions you discuss with your lender
You can get deeper details about the types of mortgages and all their elements here.
Although getting a mortgage can prove challenging today, being prepared with these tips will help you understand what is required to qualify.
If you are considering buying a home in the GTA, reach out to the BuyRealty.ca Brokerage today. We will help you with purchase and guide you through the Mortgage Process.
What is a bidding war, and what is the best way to prepare for one?
Imagine walking into a perfect property for sale. Immaculate finishes, amazing location, spectacular design, all bundled into one perfect listing. Your heart is set, you know that “this is the one,” and you decide to put in an offer. However, you know that with everything being this perfect for you, it will be perfect for someone else too, and you begin to prepare yourself for an inevitable bidding war.
What is a Bidding War?
Real estate reality television shows have portrayed the dreaded bidding war as a flurry of back-and-forth phone calls between the selling agent and all of the buying agents. Heated discussions about the price to beat and agreement conditions to waive hours on end until the one buyer stands victorious overall.
Except, in reality, it is much tamer. In Ontario, a “bidding war” is a more aggressive name for “multiple offers.” When a seller has listed their property and they receive more than one offer, they are in a situation where they can make the buyers enter a bidding war.
Seller’s Best Scenario Highest Selling Price
This is the best-case scenario for any seller. More competition means higher demand, which can translate at the end of the day to a greater selling price and/or fewer conditions. This is because the buyers realize that not only do they have to satisfy the seller, they have to appear better than every other buyer. Sometimes, there may only be one. Other times, there may be more than 30.
Offer Review Date
A common strategy when the seller and their agent can predict that a bidding war will occur for their property will be to withhold reviewing any offers until a specific time and date. This will likely cause buyers to put their best offer forward from the get-go, unknowing what everyone else has offered.
Contrary to popular belief, this will not always cause the buyer with the deepest pockets to win. Sometimes, buyers will only offer what they think the property is worth. Other times, buyers will offer less with more favourable terms for the seller. Due to the nature of bidding wars, there is a delicate line between winning the bid and exceeding the budget.
Ways to Win a Bidding War
Going back to that perfect property, take a moment and remember that this process is essentially a blind auction. You write down your bid on a piece of paper, submit it, and hope for the best. The seller’s agent can not disclose the highest offer, only how many people are in the running. So here are some ways how to gain an edge over the competition.
Strike While the Iron is Hot, the infamous Bully Offer
A “bully offer” would be the real estate equivalent of buying a painting from an auction catalogue prior to the actual auction. When a seller is only going to review offers on a specific day and time, they may be willing to entertain any pre-emptive, aka “bully” offers.
If a buyer makes a bully offer, they typically offer more than the seller’s asking for. However, less than what a bidding war could potentially raise the price up to. The buyer also gives the seller a minimal amount of time to respond to the offer, hoping that the seller is enticed by the favourable terms and is pressured into accepting the offer.
This does not always mean that this is the best way to approach a bidding war. While the buyer does create a situation where they push out the competition, there may not have been any other interested parties to begin with. The buyer could easily overpay for an unappealing property. On the other hand, the seller, in accepting a bully offer, potentially loses out on even more profit from the upcoming bidding war.
Keep in mind, however, that this move has been viewed as so unethical to the point that in 2019, the Ontario Real Estate Association (OREA) president stated that “the government should use its current review of the act that governs Real Estate Agents in the province to bar the practice.”
Climbing out from the Jaws of Defeat with the Escalation Clauses
Just because an offer begins near the bottom does not mean it is trapped there forever. “Escalation Clauses” are designed to increase an offer price to assist in defeating competing offers. When included in an offer, they can increase the offer price by increments automatically using a predetermined set amount when faced with other offers. Buyers can also limit growth to these increments to ensure they do not exceed their budget.
This is useful when a buyer and their agent predict that there will be a bidding war, but the final price will not reach their maximum budget. Escalation clauses ensure that a buyer only pays a set amount over the second-highest offer. The seller may also benefit, as they are receiving slightly more than what was originally on the table.
Like with everything, however, there are downfalls. Any offer with an included escalation clause cannot be revoked during the irrevocable period, and if accepted, it is legal and binding. An offer with an uncapped escalation clause could cause the offer price to soar beyond any reasonable amount. Additionally, an escalation clause with a limit could outright lose to any offer with an initial amount higher than the limit. Sellers must also be cautious, as the property would need to be remarketed if the buyer cannot afford the escalated amount.
Although this move also causes complications in many real estate transactions due to its complexity for all parties involved, it is within the legal and ethical guidelines that real estate agents are bound to when done correctly. The Real Estate Council of Ontario (RECO) stated in 2017 that “[they do] not endorse the use of escalation clauses.” However, they “[have] no authority to prohibit their use.”
Best Foot Forward
When stuck in a bidding war, the most common method for a buyer is to simply place their best offer. A straightforward offer is easy to understand by all parties and clearly defines the parameters. Buyers can better estimate the mortgage they need and any extra closing costs (legal, taxes, etc.). Sellers may also appreciate that the offer is simple and shows a serious interest in the property.
However, this also means that the simplicity causes these offers to be defeated easily. Due to the limit of the offer, any competing offer that initially begins at a higher amount has a higher chance of being accepted.
Who Can Help Me Through a Bidding War?
The team at BuyRealty.ca has the expertise and experience to handle every kind of real estate transaction. We can ensure that your offer stands out beyond monetary value with the right conditions. Our members have performed thousands of transactions and can help you navigate and remain composed through tough decisions. We also make sure that every transaction is unique and specialized to fit your specific wants and needs. We can protect your best interests while ensuring you get the best possible deal.
Click here to learn more about BuyRealty.ca and the members that realize their buyers’ potential.
