Eight months ago, we put an offer on a two-bedroom condo in the west side of Vancouver and our offer was accepted out of ten offers in total. It was the first offer we made after looking for a new place, and after several months of renovations, we moved in last month.
After moving into our new place, we listed Damon’s one-bedroom Yaletown condo and it sold in 6 days with 17 offers for 15% over our asking price.
Our experience being on both the buyer and the seller sides of the table gave us a lot of insight into what makes offers successful in the crazy Vancouver condo market.
It’s no news that Vancouver is a strong seller’s market and one of the toughest markets to buy in. The average sale price of a one-bedroom condo in Yaletown was $722,642 in July, which is almost 19% growth in just one year. The average price per square foot is between $1,100-$1,200. Vancouver has the third most unaffordable housing market in the world.
Condos in central locations close to or in downtown Vancouver are in high demand, especially ones listed under $750,000 that appeal to a lot of first time homebuyers. We know of many friends and colleagues who are in the market for a condo and have felt the disappointment of unsuccessful offers, even ones they made that were $150,000 over asking price.
If you are a first-time homebuyer or a first-time-in-a-long-time homebuyer, we have 6 tips that we hope can help you buy a home in this market.
1. Don’t try to get a “deal” in a seller’s market.
Right now is not the time to try to get a deal. Supply is low and demand is high. If you’re trying to get a “deal” you’ll most likely be outbid. You might be able to get a deal for a place that’s not turnkey and that requires a lot of improvements, but even a lot of those are selling well above listing price.
2. Your offer needs to be subject-free
Subjects are essentially conditions that need to be met in order for the sale to be official. Key ones include “subject to financing”, “subject to inspection”, and “subject to sale of existing home”. Subjects are a buyer’s safety net but unfortunately, unless your offer price is very competitive, you need to have a subject free offer in the Vancouver condo market. As sellers, the top 3 things we looked at were offer price, subjects, and dates. Of the 17 offers we received for Damon’s Yaletown condo, 14 were subject free and those were the only ones we considered. When we bought our home, we went subject free and it was accepted over a higher offer that had subjects. Sellers want to close, and in the Vancouver market you have to do everything you can go make your offer worth considering. Condition-free offers can feel very risky to first-time homebuyers, which is why our next three tips are important.
3. You need a proactive mortgage broker
You need a proactive mortgage broker who will review the property that you’re making an offer on so you can go subject free on financing. A pre-approval does not guarantee that your financing will come through because lenders review every property and purchase before approval, but a good mortgage broker can give you reassurance that financing won’t be a problem. Damon is a mortgage broker and ensured that the financing was in place when we made our offer. Both you and your realtor should be talking to your mortgage broker to understand your ceiling and leave you some room to negotiate. For homes under $1M, be prepared to offer 10-15% more (we offered 13% above list price on our condo).
4. You need an experienced and aggressive realtor
Being able to go subject free on other items means you need a realtor who is familiar with buildings in your area of interest and can steer you in the right direction. One of the offers we received on Damon’s Yaletown condo was actually below list price, and we were sure it must have been a typo. Turns out it wasn’t. A good realtor won’t allow you to waste your time and let you make offers like that. He/she knows what comparable sales are, has researched sales of similar units, and reviews strata minutes with you. Your realtor should also be communicating with your mortgage broker to ensure that they are not recommending offers and dates that are unachievable.
As mentioned earlier, dates are also an important factor for sellers. A shorter closing date is not necessarily better. In our case, we were already in our new place when we listed our Yaletown condo so sooner was better, but if we were still in the middle of renovations we would have wanted a later closing date. Your realtor can ask the listing agent what the seller’s preferred closing date is. In summary, a good realtor doesn’t waste your time getting your hopes up on offers that don’t stand a high chance of being successful. I want to give a shoutout to our realtor Maria Senajova, who helped us successfully buy a home on our first offer and sell Damon’s Yaletown condo for the best price possible.
5. Go subject free, but protect yourself
To protect yourself, have a clause in your offer that allows you, your appraiser, designer, or contractor access to the property at a minimum of one time, preferably three times, before the possession date. This doesn’t make your offer more or less attractive because it’s not a subject. We stipulated this clause in our offer and it was very helpful because we arranged a visit by our bank’s appraiser and two visits with our contractor and interior designer before our possession date.
6. Finally, don’t get upset
This is hard, because it’s obviously very emotional when you’re trying to buy the home that you will be living in. You picture yourself in it and you imagine living in the neighbourhood. It’s not easy, but try not to get emotional or upset if you don’t get a place. Pay what’s reasonable given the market but don’t let your emotions lead you into overpaying. Know that market can be seasonal and there will always be more listings. It will work out eventually.