Where to Find Your Best Real Estate Bargains

This is a question that is on the mind of home buyers even in busy markets. Now that we have a downturn the question pops up with even greater regularity.

the Market in General

To best determine where the best savings are we first need to take a look at the market in general before getting into the specifics of where to find your best bargains.

Todays market is curious to say the least. Where you buy and what neighborhood you choose can affect your savings greatly.

For instance, the area between the DVP and Victoria Park, from the lake, north to say O'connor (E01, E02, E03 - Riverdale, East York, Beaches) is experiencing a contraction in listings! I mention E01, E02, E03 in particular because that is home turf for me, BUT as I understand it, this is true for numerous popular areas throughout the city.

I attribute this to a situation where the hurt being felt in some manufacturing sectors has not trickled down to the majority of people in the city. In plain terms, most home owners in the city have not felt the pain in the economy. They realize that if they sell they are going to take a bit of a hit on the sale price. In a nutshell they have decided, "why sell if we don't have to?"

Another factor in the decision not to sell is the dreaded City of Toronto Land Transfer Tax. After a home owner sells, they are going to need to buy something and the LTtx almost doubles the expenses associated with buying. Make no mistake, even before the downturn, the LTtx placed a decided chill on home sales. Every month since the implementation of the tax we have witnessed a reduction in home sales!  ... thank you David Miller.

So if existing home owners aren't selling and moving up, who is buying?

First Time Buyers

In a healthy Real Estate market, typically we will see 30-40% of home buyers being the "first time buyer" . In todays market this is closer to an astonishing 80-90%.

First time buyers get up to a $3700 rebate on the City's LTtx. They are also reaping the benefits of lower interest rates.

The price point for first time buyers is generally $400,000 or less... and guess what? A recent industry publication indicated that for the month of February, sales $400k and less accounted for a whopping 95% of sales.

So, where are the bargains?

Even though listings are down, the publics impression is that of doom and gloom and they refuse to pay market value and will wait to buy if they have to. Consequently, anyone selling needs to be very realistic with their price point. If there isn't a perceived savings on behalf of the buyer then the seller is going to take longer to sell their property.

Some people who do need to sell are reluctant to take less and sometimes are listing too high.

You may be interested to know that prices are only off an average of 5% (in Toronto) year over year despite the impression the newspapers might suggest. Also, on average, homes are only taking about an extra 10 days to sell.

If you make sure your Realtor does there homework regarding specific homes in specific areas you can still find a good deal.

the Bargains

Properties Over $400k

As mentioned, the higher the price point over $400k the slower the sales. Consequently, there are some really good deals in the upper range. This is particularly true once you get out of the real demand areas like the "Beaches". If you look a little east of Victoria Park there are some really nice homes for relatively "cheap" prices.

Divorce

Whether it be a good market or soft market, some of the best deals available come from marital discourse. I don't know the exact figures but something like 50% of marriages end up in divorce... that's a lot of people. The problem with this one is determining if this problem (opportunity) exists. If the Listing Agent even knows it is doubtful they will tell you. They have a fudiciary responsibility to the Seller with respect to keeping information like this private. As well ,they are obligated to get the Seller the maximum amount of money for their property.

That said, there can be tell-tale signs. Watch for scarce furnishings, and or clothing... could be a sign one of the parties has moved out.

Also, vacated properties could be a sign.

Vacated Properties

Why are some properties empty. Well, it could be marital but there are other reasons as well... Seller may have; moved to new home / been transfered / died / recently renoed (builders property).

Whatever the reason, sitting on an empty property is an expensive proposition and you can bet they want it sold ASAP. If you can arrange a quick closing your Agent can use this to leverage an even better deal.

Estate Sales

This is also a good one in any market. Families just want to get rid of the property and move on with their lives. Also, quite often these properties don't "show well". Old and tired furniture and decor reduces the resale value and the estate usually doen't want to invest a lot of money in improving the property to facilitate a higher price.

Bank Sales

This generally doesn't deliver as good a deal as many buyers expect, PLUS there are a few caveats. Unlike the States where Banks use "Foreclosure" to repossess properties, kicking the home owner out and liquidating the property to mitigate the mortgage, Canadian Banks use "Power of Sale" and are compelled to try to get market value for the property. If the property hasn't sold in 3-4 weeks it usually starts to drop but then this is true for almost any property. If the home stays on the market for an extended period (2-3 months) then often a good deal can be had.

BUT, the caveats... Bank properties are sold "as is". So what you see is not necessarily what you get. Remember the owner is allowed to live in the home until the closing date of the sale. It is not unusual for the owner to be unhappy with losing their home and sometimes they can create damage and or even take appliances etc. If they do you don't have any recourse... you bought it "as is".

Also, the owner is allowed to "make good" on their arrears at any time up to the closing date so you may be ready to move in and find out the owner is back in the banks good books and you no longer have a home to move into.

the Bottom Line

Pretty much all properties are cheaper than they were last year. If you find one you like then buy it. You would be surprised how quickly homes are selling.

If you want a really good deal, you and your Agent need to do your homework. You may also want to consider a higher price point or different neighbourhood if the area is experiencing high demand.

Good Luck!