According to The Economist and Moody’s Analytics renting, or owning apartments/ houses, specifically in Toronto and Vancouver, is increasingly expensive, relative to the average Canadian income. This is why real estate experts from outside Canada send out warnings regarding the overpriced Canadian real-estate market. Canadian homes are on average up to 34% more overpriced in relation to the average income. In order to make sure that you don’t pay too much for your future home you can follow this list.
1. Compare the property to similar, neighboring properties.
A similar property has approximately the same size, and similar amenities as the one you are interested in. In order to be comparable it should also be in the same neighborhood, and in a similar condition. If the property of your interest is more expensive than other comparable ones it is probably overpriced. However, you can also compare the property you are interested in to different properties. Is the property of your interested in less expensive than a larger, nicer property? Than it is more likely to be priced right. At the same time, if it is more expensive than a comparably larger or nicer property it is most likely overpriced. Make sure to do thorough research and to make detailed notes. This way you have talking points when it comes to negotiations.
2. Ask your real-estate agent.
A good, experienced real-estate agent should be able to give you an estimate on the property’s value, without having to do too much research, or analyzing of data you have collected. Tell them the price the property is listed for, and ask them for their opinion. If it is overpriced they might be able to explain why, and they may even give you good advice on how to negotiate. If not, they may have similar properties to offer you.
3. How long has the property been on the market?
There are several possible reasons for a property not to sell. If the property has been on the market for a while, there could be something wrong with it, or it might simply be overpriced. However, the seller might not even be aware of fact that it’s overpriced. If you want to find out how long the property has actually been on the market you can search it on MLS. By adding the DOM filter (days on the market), the website will tell you how long the property has been listed on the market.
4. Try to negotiate.
If you decide to purchase an overpriced home, it doesn’t mean you can’t try to negotiate, and lower the price. Don’t be worried about insulting the seller, you have done your research, it is not your fault that the seller is overestimating their property. It is very likely, that the seller doesn’t even know that they are trying to sell their property at a price that is too high. If the property is on sale for a while, because no one was interested in buying an overpriced home, the seller will probably be willing to lower his or her price. In this case it is definitely worth negotiating. To make your offer more attractive to the seller you can try several things. You could present your research to the seller; show them what comparable properties are priced at, and state the price your real estate agent estimated the property to be. You can also try to suggest a large deposit. This way the seller will understand that you are serious about planning to purchase their property, or you can mention compromises when negotiating. Make sure the seller knows that you will accept special requests from them (www.inthebeach.com).