All over the country, potential homebuyers are breathing a sigh of relief. After two years of soaring prices, record-low inventory, intense competition and all-out bidding wars, the market finally seems to be balancing out. 

However, now there’s something else for potential homebuyers to worry about. Interest rates are rising, and the higher cost of borrowing is scaring some people away from the market. 

Unfortunately, there will likely be even more interest rate hikes to come. Will the higher rates negate any benefit of lower prices? Mortgages can be complicated. That’s why we put together this guide to help you navigate the different types of loans and find the best option to help make your purchase affordable. 

We talked to our mortgage specialist Alexandra Trahiotis, who has been helping clients secure the best rates and terms for over 20 years.

We did our best to throw her for a loop, but there was no question that Alexandra could not answer!

What do you recommend during a shifting market, a fixed-rate or variable-rate, and is it different from a “normal” market?

Alexandra Trahiotis: My advice would definitely have been different six months ago. When the rate was 1.89%, I would have leaned towards a fixed rate. It was so low that you would have wanted to lock it in for as long as possible.

With the current fixed rate of 5.19%, I recommend going with a variable rate because in the majority of cases variable rates tend to outperform the fixed rates on interest costs. This means you would pay less interest overall. I would also recommend increasing their payment up to the fixed-rate payment to offset the interest cost to have more of your monthly payment go to the principal, then interest.

I recommend first-time buyers go with a fixed rate because they don’t have to worry about their payments changing.

It always pays to be an informed buyer, especially as the market changes. Here are some other posts you may find helpful:

• 7 Benefits Of Working With A Real Estate Agent
• Pre-Qualification Vs Pre-Approval: Which Is Better?
• Ready For Condo Life? Here’s What You Should Know

What are some of the pros and cons of variable rates that some people don’t know about?

Alexandra Trahiotis: First of all, the variable rate will almost always be lower, so there are very few downfalls to choosing that route. You’ll pay your mortgage off faster because more of your payment goes towards the principle of your loan rather than the interest.

Of course, some people are concerned about fluctuating payments. With the five central banks, that might be an issue. 

However, many other A and B-level lenders provide more flexible options.

• If the rate scales down, more of your payment goes toward the principle. 
• If it goes up, your payment remains the same, but more is allocated to interest. 
• The only time your payment might change is if the interest rate goes up by a full percentage point. In that case, your lender will make adjustments so that your amortization period doesn’t increase.

What is your advice for anyone who is looking for a mortgage?

Alexandra Trahiotis: I have three tips for anyone who is serious about getting a mortgage and buying a house.

1. Get pre-approved.
2. Get pre-approved.
3. If you haven’t already, get pre-approved.

Not to sound repetitive, but so many clients come to me and have no idea of what they can afford. You don’t know what you don’t know. People assume things, and they shouldn’t.

You have to know how much you can qualify for.

Some people think that they can afford to spend much more than they actually can. Many factors come into play, like how much debt you have, your salary and your expenses. If you have a commission-based job, you can’t qualify based on your best months’ income. You have to take your two-year average. No institution wants you to be house poor, so they look at everything. 

On the other hand, some people think that they can’t afford a house at all. I had a retired couple recently who came to me thinking that they wouldn’t be able to buy, but they decided to give it a shot. It turns out they qualified for an $800,000 mortgage! 

Now they’re living in a nicer home than they ever imagined they could afford. But they would still be renting today if they hadn’t taken that first step of getting a pre-approval.

Do you have any tips for current homeowners looking to refinance?

Alexandra Trahiotis: To anyone coming up for refinancing, I recommend a thorough financial review with myself, a qualified mortgage broker. For example, if you have a ton of credit card debt, consider rolling it into your mortgage. If you’re making the minimum payment on a card with a 20% interest rate, you will never pay off that debt.

But when you consolidate your debt into your mortgage, your rate drops to 4.8%. You can pay down your debt faster and free up more monthly cash flow. 

Everyone should do a regular financial review because you never know what opportunities are waiting for you.

You can get rid of debt or even find ways to grow your wealth.

Another example is investing in real estate. Many people with a mortgage think they could never afford to have a second home.

But you might be surprised at how affordable investing in that second property can be, especially if you have equity in your home.

Speaking of investing, here are some other helpful resources:

• The Market Is Changing. Is Real Estate Still A Good Investment?
• How To Grow Your Real Estate Portfolio in 2022

What are your clients most surprised by when they apply for a mortgage?

Alexandra Trahiotis: I find clients are often surprised by just how much they can afford. People come in with bruised credit or are self-employed. Sometimes people have been rejected by the central banks, and they start to feel pretty discouraged. 

For the banks, you must have a pristine credit rating before they even look at you. But you should talk to a mortgage broker because there are so many opportunities you don’t know about. There are high-quality lenders who will help you, no matter what your situation. 

There are lenders for retirees, the self-employed, and those with a spotty credit history.

It’s important not to write off your potential before you’ve explored all of your options.

Do you have any other advice to help clients secure the best product?

Alexandra Trahiotis: Once again, I recommend getting pre-approved. It doesn’t just let you know how much you can qualify for – It also enables you to lock in the lowest interest rate for up to 120 days.

I have clients who locked in the ultra-low rates back in March, and they’ve just started looking for houses. 

One last piece of advice I have is to try not to be discouraged by the news. All you hear is that interest rates are increasing and making houses unaffordable. 

But housing prices are coming down!

Your rate might be higher, but the house doesn’t cost as much, making your payment lower. You have to look at the actual numbers, not just the percentages. In February, you could have locked in 1.4% on a house with a listing price of $1 million. But there was so much competition that you might have had to add hundreds of thousands to your offer. Now, that same house is only $800,000. The rate has increased to 4.8%, but your payments would still be lower.

Even with the recent increases, interest rates are still low compared to a few years ago. I recommend getting a pre-approval to lock in the best rate now. If rates happen to go down when you buy, that’s great news. Your lender will adjust to the lower amount. Locking in your rate now only protects you from further increases and makes buying a home more affordable than you might realize. 

If anyone has any questions about mortgage rates, they can reach out to me by email.

Are you ready to start searching for your new home? Our featured listings page is a great place to start.

The Canadian real estate scene is quickly approaching the closest thing to a buyer’s market we have seen for a long time. As early as two months ago, you’d have faced stiff competition if you wanted to purchase a house. Many buyers had to bid hundreds of thousands of dollars over asking to have  a shot at success. 

Now, after a series of interest rate increases, the Canadian market has dramatically slowed. By the numbers, we can’t exactly call it a balanced market, at least not yet. With two months of inventory available, conditions still favour sellers at the moment. But for buyers, things are definitely looking up. There are far more listings to choose from, which provides a little more negotiating power. Now, you can often get your offer accepted at the list price or even a little below.

Real estate can be unpredictable, but these articles may help answer your questions:

• Our Guide For First-Time Buyers
• Are Conditional Offers Making A Comeback?
• The Market Is Changing. Is Real Estate Still A Good Investment?

As conditions swing more in favour of buyers, it may be a good time to review some of the most common terminologies you should know.

Two terms you will often encounter are pre-qualification and pre-approval. They are sometimes used interchangeably, but they are very different. What do they mean, and which one gives you a better chance of placing a winning bid?

Pre-Qualification

Getting a pre-qualification is easy. You can go online to any of the major banks to complete the process, which only takes a few minutes. You’ll submit basic information about your income, marital status and personal assets. Based on your answers, the bank will give you a rough estimate of how much of a mortgage you may be able to qualify for.

It’s important to remember that a pre-qualification isn’t 100% accurate because it does not verify the data you enter. The lender gets only basic information and isn’t performing a credit check or looking closely at your financial history.

Why bother with a pre-qualification when it doesn’t seem to hold much weight? It depends on where you are in the buying cycle. Getting a pre-qualification is a helpful first step if you’re in the beginning stages or just starting to think about buying.

When you’re done, you’ll have a quick snapshot of what you might be able to afford based on your current financial situation.

• For example, if you earn $25,000 a year and the average house in your area costs $1 million, you might be facing an uphill battle.
• If you’re earning $120,000 and a house costs $400,000, your chances are much higher, barring a heavy debt load or poor credit history.

If you want to buy a house quickly and have done some research and preliminary work, you might decide to skip a pre-qualification altogether. In this case, you can go straight to getting pre-approved.

Pre-Approval

A pre-approval shows that you mean business about buying a home. It provides the lender with much more in-depth information and is more involved than a pre-qualification.

Your lender will ask you to complete an official mortgage application, and you’ll have to supply documentation to verify your identity, income, assets and debts.

You will also have to pass a credit check.

Once a thorough investigation is complete, you’ll have an accurate picture of how much you can borrow and what kind of home you can afford.

Your pre-approval is usually good for 90 to 120 days, which protects you from further interest rate increases. If you run out of time, you may be able to get an extension but could lose the interest rate protection.

After your application, it could take a few days for your pre-approval to go through. It may take longer if you are self-employed or have a complicated credit history.

Once the lender is satisfied with your ability to repay, they will write you a letter of pre-approval. With this letter in hand, you can now start searching for your new home!

You can place offers up to the maximum amount of your loan, plus whatever down payment you have saved.

A Pre-Approval Is Not Guaranteed

A written pre-approval is a commitment by the bank based on your current financial position. However, it’s crucial to remember that it is not guaranteed. If anything changes in your life, the bank can refuse your mortgage. For that reason, we recommend holding off on other major purchases, such as cars, vacations or furniture. And if possible, avoid switching jobs until the transaction is complete.

Pre-qualifications and pre-approvals are just two concepts you should understand before buying or selling. Here are a few other things you should know:

• What Happens When A Buyer Breaches Their Contract?
• Deposit Vs Down Payment: What’s The Difference?
• Conditions & Clauses On A Real Estate Purchase

Why Is Getting Pre-Approved So Important

A pre-approval will give you a serious advantage if you intend to buy a house within the next few weeks or months, especially in a competitive market with multiple buyers.

A pre-approval in advance helps you craft a compelling offer that sellers are likely to accept because you can remove the financing condition.

Once a seller accepts your offer, the full mortgage process begins. Not to worry, however. You have already completed most of the work involved. All you need to do now is start planning your move into your brand new home! 

No matter what stage of the home buying process you’re in, we can help! You can book a free meeting with us here, and we will happily answer any questions you have.

When gearing up to buy or sell a house, you may believe that the deal is over once the offer is accepted and signed. 99% of the time, you’re right. After all, a sales agreement is a legally binding contract, and there can be significant repercussions if either the buyer or seller backs out. 

Once the paperwork is taken care of, you should feel confident in moving on to the next step. However, you should be prepared and have a backup plan in the rare situation that the deal falls through. 

Let’s take a look at some scenarios and what to do if one party fails to live up to their end of the agreement.

Contingencies Aren’t Met

For the past two years, sellers have gotten used to receiving unconditional offers from buyers in an ultra-competitive market. However, the market has slowed down since its peak earlier this year, and conditions have become more frequent. What does this mean, and how can it cause your sale to fall through? 

Let’s say you accept an offer with a condition of home inspection. If the home inspection turns up an unexpected flaw, the buyer can back out without repercussions. 

You may be able to negotiate by lowering your price. Still, the buyer will be under no obligation to continue with the purchase, and their deposit will be returned to them.

Yes, the rumours are true, and the market is shifting. Here are some articles to keep you well-informed:

• How To Stand Out In A Changing Market
• Are Conditional Offers Making A Comeback?
• The Market Is Changing. Is Real Estate Still A Good Investment?

Can A Buyer Change Their Mind?

If there is a verbal agreement, but no signature, either the buyer or seller can back out without consequences. Once the paperwork is signed and the conditional period has passed, it becomes much more difficult to cancel the deal. However, sometimes things don’t go according to plan, no matter how thorough you are. A buyer can try to back out for several reasons.

• Perhaps they couldn’t get the financing they were counting on. Some buyers will make an unconditional offer to try to be competitive, only to find they can’t qualify for their loan after all.
• Or maybe they found a different home that they like better and want to back out of the contract. Legally, this isn’t allowed, but it does happen.

If a buyer breaches a contract after conditions are met, you have several recourses. You can try to renegotiate the sale under different terms if the buyer is willing. 

As a last resort, you can even consider legal action to compel the buyer to meet their obligations. In any case, there’s a good chance you can keep the deposit if the buyer is in breach of the contract. 

You will have to decide if legal action is worth your time and effort. In a strong seller’s market, you may be better off starting over with a new buyer. A good real estate agent or lawyer can walk you through your options to help you reach the best outcome.

What If The Seller Backs Out?

What if you’re the buyer and the seller is the one who gets cold feet? Buying a home in this market is a challenge, and it can be disheartening to find the perfect place only to have the seller withdraw from the agreement. Though rare, a seller may want to back out of the deal for several reasons:

• A sudden family emergency such as a job loss or severe illness may make moving impossible at this time. 
• They may have received a higher offer for their home. Typically, the seller would be obligated to honour the sale unless they’ve negotiated an escape clause into the contract.
• The market has changed, and houses are now worth more. The seller wants to cancel your agreement and sell the home to someone else for more money.
• Perhaps they’ve changed their minds and don’t want to move at all. This happens frequently during hectic seller’s markets where the homeowner worries that they won’t be able to find a suitable house before the closing date.

Can a seller back out legally? Not usually, but they may have outlined conditions in the contract. Sellers can use contingencies to protect themselves, just like buyers can. 

Are you looking to buy a home but not sure where? These neighbourhood posts will give you some food for thought?:

• Hamilton Vs Toronto: Which Should You Choose?
• 5 Things To Know About Moving To Burlington
• What To Expect When Buying A House In Waterdown

What Are Your Recourses as a Buyer?

If the seller tries to back out, the first thing you should do is call your real estate agent and lawyer for advice. You can take legal action and get the courts to force the seller to close. Otherwise, you may be able to sue the seller for the difference if you end up buying a similar property for more money. Of course, legal action is stressful and time-consuming and should only be used as a last resort. 

It will save both of you a lot of time and worry if you can come to a mutually beneficial agreement outside of the courts. 

Your real estate agent may help you save the deal by negotiating a longer close or different terms that work for both parties. Otherwise, you’ll likely get your deposit back. You may even find another suitable property for a similar amount of money. 

In any case, it’s important for both the buyer and seller to read the contract carefully with an agent or lawyer, so you understand what you are agreeing to.

Are you planning to buy or sell a home this year? Our dedicated agents are well-versed in the Hamilton, Burlington and Dundas areas and will happily answer any of your questions. Reach out to us today.

Waterdown is quickly becoming a very desirable area to live in, especially for families with young children. Why? It isn’t just because of the scenic views that go along with being so close to the Niagara escarpment. Families have many fun activities to enjoy together, going on hikes, cycling through the escarpment trails and exploring nature through all seasons. 

Not to mention the many parks, sports opportunities and children’s programming at public libraries and recreational centres. And who can forget the skating loop that opened in 2016 at Waterdown Memorial Park? This one-of-a-kind loop draws thousands of visitors every winter. During the warmer months, you can see people tearing up the loop with their inline skates! 

Thinking of selling your home in the next few months? Here are some other posts you may find helpful:

• How Long Does it Take to Sell a House?
• 5 Seller’s Mistakes to Avoid
• Hamilton vs Toronto: Which Should You Choose?

The word is out about Waterdown, and we can expect many new families to take up residence here, especially as housing prices continue to soar in Toronto and the GTA.

What does this mean for you if you currently own a home in Waterdown? The increased demand for family homes and the current real estate conditions make it an ideal time to sell.

What’s Happening With Waterdown the Real Estate Market?

The cost of housing has increased dramatically all over the country, and Waterdown is no different. A few years ago, this was considered one of the more affordable regions in the GTA. However, recent MLS® stats show that the average price for a four-bedroom detached house in Waterdown stands at $1.3 million. A three-bedroom townhouse averages out at $966,000.

For residents in the Hamilton area, this price is steep. However, for those flocking in from Toronto, Mississauga and Oakville, it is very affordable. 

Will these conditions last?

Try as they may, no one can reliably predict what will happen in the real estate market. However, all signs currently point to a slight cooling since February. We may even be heading into a more balanced market in the months ahead. Selling now will help you capitalize on unprecedented home prices and earn a maximum return on your investment. These earnings will help fund your next stage in life. 

How To Make The Most of Your Sale

Selling your house is a significant life event. It can be emotional and stressful mixed in with the thrill of a new adventure. The best way to empower that next step is by maximizing your sale. The proceeds from your house can fund your next purchase or provide an income stream to supplement your retirement. The more you get, the more comfortable your financial future will be.

How can you get the best results?

Start by researching the market in your neighbourhood. Have any homes have sold recently? Knowing the history of prices in your area will give you an idea of how much you’re likely to get for your own property.

Before listing your house for sale, you want to know how much it’s currently worth. The best way to do that is with a free home evaluation, which you can book here.

The next step is to take a look at some of the ways you can increase the perceived value of your house. It always starts with scrubbing from top to bottom and getting rid of excess clutter. 

This simple step often gets overlooked, yet can help to create an unforgettable first impression on a buyer.

Once your house is thoroughly clean, you might consider doing some minor upgrades and improvements. The key is to find the updates that will add significant value but won’t cost a fortune to implement.

How a Local Real Estate Agent Can Help

Selling your home can feel overwhelming, but it’s important to know that you don’t have to do it alone. A professional real estate agent is likely to help you earn far more than you would have on your own. In addition, they’ll take most or all of the burden off your shoulders. How?

• By guiding you through what renovations you should invest in and what you should leave alone. Your agent may even have a trusted team that will do all of the work for you.
• Staging, photographing and marketing your home effectively. If buyers don’t know about your home, you can’t make the most of your sale. A good agent knows how to use online marketing, social media and print advertising to drive maximum attention to your listing.
• Showing your home and negotiating with potential buyers. Selling a home can be more time-consuming than a lot of people think. You have to work around the buyer’s schedule and often have to be available for a showing at a moment’s notice. High-level sales and negotiation skills are also needed to bring the transaction to a successful close.

With a professional real estate agent on your team, you don’t have to worry about any of that. Your biggest job is to decide what to keep and what to donate and plan out your next steps after your house closes!

Can a local agent really help you sell for more money? Find out here.

The Best Time To Sell is the Right Time For You

The market conditions are perfect for anyone who wants to sell a home in Waterdown right now. The only question is whether you’re ready to take the next step in your journey.

Ready to sell your Waterdown home? We are happy to answer any questions about your next steps. Book a free, no-obligation meeting with us here.

Buying a house is the most expensive purchase that you will ever make. There are many factors to consider when buying a home and, most importantly, it requires understanding the contract because buying a house is complicated.

When an offer is formally presented for making an offer on a home you want to buy, you will need to fill out a lot of paperwork specifying the terms of your offer. In addition to the obvious items, like the home’s address and purchase price of the property, there are additional items that you should consider adding to the purchase contract.

When people go to purchase a home, there is sometimes confusion concerning conditions and escape clauses in real estate agreements. Although there is some concern over the clarity of the conditions, it is rather straightforward and dependent on how the clause is initially written. A potential homeowner should keep in mind that closing the deal isn’t the biggest step in the transaction, but rather it’s the small steps in getting to the end result.

In technical terms, a condition is defined as “a requirement that is fundamental to the very existence of the offer.” If there is a break of a condition on the purchase agreement, the buyer is allowed to get out of the contract and the full amount of the deposit is returned.

According to Brian Madigan LL.B., read articles Ontario Real Estate Source, there are really just two categories for conditions:

1. Pending deals (those which require a confirmation)
2. Confirmed deals (those which include an escape)

He states that “pending deals are usually described by a condition precedent clause, and confirmed deals with a provision for escape are evidenced by the condition subsequent clause. The condition precedent clause begins with the words “this agreement is conditional upon….” and the condition subsequent clause begins with the words “the purchaser shall have the right to terminate…”

There are numerous types of conditions that might be included in the Offer to Purchase, but one of the most important clauses for a potential buyer to understand is the financing condition.

What happens if you’re selling your house during challenging situations or a tough market? The resources below can help you overcome anything:

• Can You Successfully Sell a House With a Stigma?
• Can You Sell a House When You Have Tenants?
• Why Sellers Hesitate to List Their Homes for Sale

Financing Condition:

The financing condition protects the buyer, which essentially tells the seller that the purchase is conditional on you obtaining financing. It will state that the financing that you obtain must be satisfactory to you in their sole and absolute discretion. This means that the terms and conditions must be satisfactory to you, the buyer. This condition is included because if you buy a property without the financing condition and you are unable to get the required funding, you are in trouble. A financing condition protects you from losing your deposit and being sued by the seller for non-completion of the transaction. If your offer is conditional upon financing, then you are obligated to seek financing in good faith. You can’t just back out of the potential deal simply because you changed your mind.

In addition to the Financing Condition, here are some other conditions that might be included in the Purchase & Sale Agreement and what they can mean for you:

Subject to Inspection:

The home inspection clause is standard and appears in almost every residential real estate transaction. This condition gives the buyer the right to have the home professionally inspected by a certified home inspector to evaluate the house that is being sold. The right for the home buyer to go on the property with the home inspector is granted by the owner of the property. This condition is the buyer’s way of being protected from the unknown deficiencies in the home. The house must pass the inspection for you to proceed with the purchase.

For more on home inspections check out:

• Your Home Inspection Report: 5 Things to Look Out For
• What To Look For In A Home Inspector

Subject To Legal Review:

This clause indicates that the buyer will proceed with the purchase of the home provided their lawyer can first review that all of the conditions have been met and approves the contract. This takes places within a specified time limit, such as 24 to 48 hours.

Do you need to sell a house before you can buy? The following resources will get you off to a great start:

• What’s Your House Really Worth?
• Minor Upgrades, Maximum Results
• Our Full-Service Real Estate Team’s Guide to Marketing Your Home

Subject To Survey:

A subject to survey is another part of a solicitor’s review in determining if there are any defects in the title. It will determine if the building(s) on the land comply with zoning by-laws or if there are any encroachments by building(s) onto adjacent lands. The survey will also determine whether any building(s) from neighbouring lands encroach upon the subject’s property. A recent survey can disclose the location of fences to the property boundary and if there have been recent additions to the property. Lastly, the survey helps to determine whether anyone else may have a claim against the subject property or if any rights of way or easements exist.

Subject To Appraisal:

This clause represents a request for a written, formal, impartial estimate or opinion of value that adequately describes the property as of a specific date. It is supported by the analysis of relevant data for the home. The report is conducted by an official appraiser to determine if the purchase price that your offer represents is reasonable and fair market value. The report includes such items as general information, legal description, taxes, assessed value and age of the dwelling. It also describes the neighbourhood, nearby schools, shopping centres, common types of dwellings, services, and utilities.

Making Your Own Conditions:

You can add any additional conditions that you feel are important for the seller to consider you offer, like removal of garbage from the back yard, leaving window treatments, appliances, special lighting, etc. While the conditions are meant to protect you and you should take advantage of them, beware of including too many in the offer because you may lose the deal and the seller will reject your offer.

How can you evaluate offers when they come in? Read more about about what offer you should accept here.

Buyer Beware:

Even though conditions are standard in purchase agreements and a good real estate agent is watching out for your best interest in the contract, it’s still well worth your while to educate yourself about the key components of a purchase agreement. This is a huge investment and probably your home for many years to come, so be an educated buyer and do not leave anything to chance.

For more real estate fundamentals be sure to read:

• What Happens When a Buyer Breaches Their Contract?
• What Real Estate Lawyers Do
• How To Negotiate A Real Estate Contract
• Fact Vs Fiction About Working With A Real Estate Agent
• What’s in Your Listing Agreement?

Whether you’re ready to buy right now or just researching, Woolcott Real Estate is here to help. Feel free to reach out with any questions you may have!

With the real estate market moving at an unprecedented pace for so long, unconditional offers have become the norm. Historically, offers typically had at least one to three conditions that had to be met before the sale could go through. However, buyers have needed every advantage they could get in the current competitive market. Dropping all contingencies is one way to make their bids more attractive to a seller. How does this help? 

While every homeowner wants to earn as much as possible from their sale, the highest amount isn’t always everything. The chance to skip a time-consuming and potentially deal-breaking home inspection can be appealing, even if it is a few thousand dollars less. Of course, all things being equal, a seller will accept the highest amount with the fewest contingencies possible. 

The Spring market is underway and houses are still commanding unprecedented high prices. Is the time right for you to sell? Here are some articles to guide you:

• How To Sell An Investment Property
• Can A Local Agent Sell Your House for More Money?
• What is a Home Market Evaluation?

However, there has been a recent change in the market, which seems to be slightly less competitive than it was just a few months ago.

What is Driving the Change?

The real estate market is complex, and there are natural fluctuations throughout the year. We won’t know if what is happening is the beginning of a long-term trend or just a brief hiccup. However, we can make our best guess based on what has happened in the past and the current information we have now. 

Rising Inflation Costs

Housing prices have soared to unprecedented highs all over the country. In addition, gas prices have also increased significantly, which drives up the cost of many other goods and services. As the cost of living increases, some buyers have withdrawn from the market due to a lack of funds. Others are watching with a hopeful eye to see if things will shift in their favour.

The Recent Interest Rate Increase

Earlier in April, the Bank of Canada raised the target interest rate by 50 points, the most significant overnight change in decades. This follows the 25-point increase that took place earlier in March. In addition, they have announced that another hike is likely to come in June. As a result, many homeowners are selling now, while buyers are motivated to take advantage of the still relatively low interest rates.

The Busy Spring Market

The real estate market never slowed down during the pandemic, but Spring is traditionally the busiest time of year. Things are slowly getting back to normal, and the past month has seen slightly more available listings. It will be interesting to see if this slight cooling of the frantic seller’s market continues after the busy season is over.

Potential Anti-Speculation Legislation

Ontario has already imposed a foreign buyer tax on non-residents, raising it from 15% to 20%. And both the provincial and federal governments are considering additional legislation to discourage speculation, foreign investors and house flipping. If this happens, the market might become less competitive for buyers.

Real estate is still one of the safest investments, even in a changing market. Here’s How To Grow Your Portfolio in 2022.

The Surprising Return of Conditional Offers

Some sellers have been surprised to receive conditional offers for their homes. However, these have always been the norm. It’s only in the last few years that the situation has become very unbalanced. The market hasn’t changed significantly and still strongly favours sellers. Even though conditions seem to be making a comeback, many listings still receive multiple offers that are well over the asking price. 

The Most Common Conditions

What kind of conditions can sellers expect if the market continues to rebalance? There are many contingencies, but we see these three most frequently:

1. Conditional on sale of the buyer’s current home. A buyer rarely has enough cash available to pay for a new home outright. Most people rely on the funds from selling their existing property before committing to purchasing another. As the market got more competitive, many potential buyers took the calculated risk and placed offers without this condition. It paid off most of the time because every listing was almost guaranteed to sell.
2. Conditional upon home inspection. Buying a house with a host of expensive problems is everyone’s worst nightmare. After coming up with enough money to purchase the home, many people don’t have a lot left over for extensive renovations. This condition protects the buyer from committing to a purchase that is unsafe or unsuitable.
3. Conditional on finance approval. Before a buyer commits, they want to ensure that they will get enough financing to cover the purchase. There are few things worse than signing on the dotted line only to find out the bank won’t lend you enough to buy the home. In the current market, most buyers get a pre-approval before submitting offers. As a result, many buyers drop the financing condition to make their offer as compelling as possible.

How To Respond To Conditional Offers

You can respond to any kind of offer in three ways:

1. You can meet the condition and accept the offer.
2. You can make a counteroffer, either for more money or to drop the condition (or both).
3. You can reject the offer and move on to the next one.

Some sellers may feel discouraged when conditional offers come in, but there is no cause for alarm. It is better to receive a conditional offer that proceeds than an unconditional offer that fails because a buyer got in over their head. How do you know if you should accept or reject an offer? Real estate can get complicated, especially in competitive markets. 

An experienced Realtor® can guide you and help you make the best decision for your situation.

Do you have questions about buying or selling in the current market? You can book a free call with our team right here.