For the most part real estate in Vancouver has been considered a sport for the better part of the past 8 to 10 years. Lately though, as a result of significant changes in the economy, consumer buying habits and real estate market, it’s become less of a sport and more about just finding a “home” or a “long term investment.” Gone is flipping a contract 1, 2 or 3 times between the original purchase and completion. Gone are the nurses or school teachers writing 2 or 3 contracts at one project and going firm on them all (hoping to flip for a big score before completing). Now that nurse, school teacher, accountant and lawyer are cautiously trying to find a place to call home. As a result of this lack of frenzy in the market, we are now experiencing a “Buyers Market”.

But what does it mean to be a “Buyer’s Market?” To the developer, a “buyer’s market” may mean having to offer additional incentives to sell homes and not to expect a sell out on the opening weekend; to the single family home seller, it may mean expecting to have that “for sale” sign on the front lawn a bit longer and likely selling below asking price.

Either way, for the buyer it means choice, and depending on the community, lots of choice - choice in projects and location, choice in interior finish, choice to upgrade in size or view and choice in timing for their purchase/closing. The list goes on…

I personally believe now is a great time to buy. I don’t just say this because my job is based on selling real estate. I share this opinion with my friends, my non real estate associates and even my barista at JJ Bean. I believe now is a great time to buy a home because selection is diverse, prices are stable, financing is unbelievably low (I almost said “free”) and Vancouver is a desirable place to live. This is great news for those shopping for a home today. All you are left with is answering 3 key questions: “is it right for my needs,” “do I want it” (yes – it fits my criteria) and “can I afford it” (yes) then the decision is to buy it.

Once the decision is made to buy, now you have to answer the questions “What do I do now?” “What can I get it for?” “When can I close on it…” Some purchasers are polite and don’t want to be offensive and ask for what is fair to all parties but others are more aggressive and ask for the moon. The important thing to realize when making an offer is that each developer/seller has a unique motivation for selling. Some are heavily motivated due to bank financing requirements or the homes are about to complete and they don’t want to pay carrying costs. This means the seller may be willing to sell at a lower cost than if the home just started construction. For others, they may be firm on their price and completion times and are unwilling to negotiate. It’s key for you to understand what the seller’s motivation is and how it relates to your home purchase and the current real estate market condition.

What being a “Buyers Market” does not mean is coming into a deal and asking for unreasonable consideration from the seller. For example - I recently had a site that has a home selling in the area of $750,000 (a number already reduced from the original $875,000 range. The buyer proceeded to “offer” below $715,000, subject to sale with an 8 week subject removal, additional incentives worth $22,000 and the developer to cover the HST. This would put the actual sale price of the home well below $650,000. We chose not to counter this deal as the developer and the purchaser were just too far apart to make a sale work. We would be wasting everyone’s time. This offer was definitely on the aggressive side of “if you don’t ask you don’t get” but had absolutely no basis in reality. All involved in this deal (except the buyers) considered this an unreasonable offer.

On the other hand we had an offer at another community at just a few thousand off the asking price, with a quick closing. The developer said NO to this deal. His reasoning was “we’ve just sold 40 homes at the asking price in 2 months. I don’t need to accept a below price offer.”Hard to argue with that reasoning but we also know that buyer will be very hard to get back to the table. The point is to know what’s happening where you want to buy.

If you want to make an offer that is fair for all involved there are a number of things for you to do:

1. The most important is to know what is going on around the site. If the home you want is already priced below nearby competition then you are not likely going to get a major discount. You may get something but be realistic with an offer. If the home is located in a project that has been selling a few homes a week then you are less likely to get a “deal”.
2. Do your homework before you make your offer. Know ahead of time if your offer is better than the market and be vocal about it. Talk to your realtor. Talk to the sales team; let them know you are aware of what’s happening in the market and why your offer is a good one (all of my sales teams are aware of what’s happening around them so don’t make it up). I have never met a sales person that does not want to sell a home so work with them and they will work with you.
3. Don’t be afraid to ask for a “deal” but make sure it’s a deal for everyone and not just a ridiculous offer hoping for an overly desperate seller. This is Vancouver, not Florida or Arizona.

Happy shopping. Enjoy the “Buyer’s Market” while it lasts.

Dan Thomson