I keep hearing the same thing over and over – “If only we had sold last Spring!” It seems the real estate bubble has left a lot of people regretting their decision to not sell in the early months of 2017. The prices had sky-rocketed to all time highs and homes were selling within a few days (sometimes within a few hours). Buyers were frantic and Sellers were receiving multiple offers, over asking price. No wonder this seems like ideal conditions to get top dollar for your home. But here’s the truth – it wasn’t all that glorious!
Sellers were forced to make split second decisions regarding price, closing dates and offers lacking home inspections and financing conditions – putting their deals at risk of not closing.
Buyers were going into bidding wars having no idea where to even start with an offer; other than knowing they likely had to start at more than the asking price.
Conditions such as financing and building inspections were seen as "unfavourable".
Buyers were scrambling for bank approvals and many had to pull together additional financing after they “won” the bidding war but for more than what their lender would fund them for.
Some Sellers ended up owning TWO properties and dealing with months of turmoil, carrying costs and escalating legal fees.
In late spring and early fall, several of these deals actually fell through when the prices started to normalize again and lenders would no longer fund the deal at the price the buyers paid for the home.
When a buyer couldn’t close on a deal, often the seller had to renege on a deal too – the ricochet effect of one deal not closing, impacted many.
The excitement of it all put a lot of people into situations with ridiculously high mortgages. Let’s not forget – sell high, buy high! For many Sellers who were purchasing in a similar geography, while they got a pretty penny for their house, they likely paid a pretty penny for the house they purchased.
Last but not least, for those who decided to “cash in and head North”, ….it turns out not everybody is enjoying life up North. Since the housing prices have started to correct, we are now seeing the situation where people want to return back to their former hometown but can no longer afford to move back without taking on an even larger mortgage than what they started out with.
Don’t get me wrong, some people did make out like bandits! There were situations where people sold high and decided to rent for a while before they purchased. For those who waited until late Fall or even now, they have done well! But the truth is, that scenario does not reflect the majority of the transactions that took place.
Fast forward to the current market conditions:
Sellers need to face the reality that in many geographies, the market is down 15-20% from last Spring. Measures have been put in place to cool the market and we have definitely seen the cooling. Prices are lower than they have been in quite some time and we might not see the old Spring prices again for several years. For Sellers, the showings are at a more realistic pace and it’s taking between 4-6 weeks on average to sell your home. Selling over asking price is no longer the norm – in fact, getting 97-98% of your asking price is considered a very strong offer. It is also not likely to see multiple offers in this market by simply pricing 10-15% below the current market value.
Buyers are looking at homes and returning for a second showing a week or two later; taking their time, doing their homework, checking out local schools and getting quotes on how much it would actually cost to renovate the kitchen to their liking. Home inspections are back on the table and financing conditions are almost always included.
While things are moving a little slower than we would all like right now, I feel much better working with Buyers and Sellers when they have the time to think through their decision to buy or sell - after all, for most of us, this is the single biggest investment we have. So stop kicking yourself for not selling last Spring. Appreciate the calmness in our current market and know that you are in a better position to make sound and well-thought out decisions. Appreciate the protection we have that comes with inspections and other conditions in our offers. Sleep well at night knowing you will have the breathing room you need to consider all the factors involved in moving. Talk to your family about homes you’re interested in and bring them along for 2nd or 3rd showings, because these days that is an option!
And don’t assume it is not a good time to sell! Selling in a cooled-off market means you are also buying your next home in that same cooled-off market.
Happy to be hanging up the boxing gloves,