Stumpylegs

It's getting to the time where we will hopefully be buying our first Canadian home, it'll likely be in BC either Shuswap or Kootenays.

Anyone know what we should be doing as far as making an offer goes, 1 house has been on the market for approaching 60 days now. I want to drive a hard bargain but don't want to offend the sellers.

Do you offer under or asking? Everything I read says it depends on the market, but apart from knowing its slowed down significantly when a town only has a small handful of similar properties on the market how do you gauge the market?

Keep seeing people saying cash buyers have more bargaining power and can often get a cheaper price, is this significant (for what its worth, I could probably scrape together 85% of the asking price in cash)?

Thanks in advance for any help, google, reddit and various websites haven't made it any clearer.

christmasoompa

85% of the asking price in cash wouldn't make you a cash buyer. Cash buyers are favoured because it means they aren't subject to a mortgage company making decisions on their behalf, and holding things up. They tend to be much quicker and easier to deal with, which is why sellers will often choose to sell to cash buyers offering less than those offering higher but buying with a mortgage.

Twitcher1958

Do you have a realtor acting for you? They should be able to advise you on local conditions.

jeremy brewer

Hi
search the property address on the websites

ojo , zolo etc

they give an estimate of the property value

a guideline i was told is use the current bc tax assessment price and then take off 10%

bc assessment site

https://www.bcassessment.ca/

but a local realtor will help, not just with price but with things like old oil tanks etc

cheers
jerry

Stumpylegs

Apologies, maybe I worded it wrong/didnt explain myself. Realise as soon as any financing is involved I am not a cash buyer. I was more wondering if I pulled together 85% of the asking price and offered that (i.e house is currently up for $800k, I've got $600k but if I was to empty every piggy bank I had I'd be up at the 675/680 mark), is offering $680k cash cheeky or sensible? Likewise what sort of movement on price would be acceptable for cash (I've bought and sold a number of properties in the UK, some with estate agents, some direct to a business, some direct from a private individual - cash has often made little difference compared to mortgage and the largest chunk of it has been splitting the difference on not paying the fees for an estate agent)

I'm not actively working with 1, I have spoken to a couple in the area and have been honestly underwhelmed - no real advise on market conditions just comments such as "everyone wants to live here" - with a small town can't help but feel realtor A is talking to realtor B in the pub on a Friday night, I'm also really struggling to not throw my toys out of the pram with how complex it seems to be here (mortgage company want to have a property lined up to agree the mortgage on, rather than going your down payment is x, you earn y, your monthly debts are w, you can therefore afford a mortgage of z. some realtors have asked for a mortgage pre approval before even entertaining me talking to them about a house).

Despite pretty direct questions none of them seem to want to say "you should be offering at least asking in this current market" or "if a property isn't gone within a few weeks, you might be able to go below asking price".

Stumpylegs

Thanks that's great info, but potentially confuses things even more...

House is on sale for 125% the assessed price, meaning if I was to offer 10% under assessment value I'd be being very very cheeky. (circa 550 on a 800k property).

I'm going to hunt round in the hope that I get a straight talking realtor who is interested in straight forward house buying.

Sunnybrae

I'm using the bcassessment website as it's useful for seeing land boundaries and also gives a 3 year sales history; there's quite a few properties for sale in the areas we're hoping to move to that are being resold within the last 3 years with a couple hundred thousand dollar increase in prices, so they are straight off my list.

Redfin https://www.redfin.ca/ is also good a good site for previous sales history as well.

The assessment value is like our rateable value so I'm taking that with a pinch of salt, it's just the value used for paying your taxes and for many properties the assessed value is way different from market value.

I would treat buying in Canada the same as over here, the market is turning downwards and I'm hoping that by the time we buy somewhere in 12-18 months time the property market crashes in Canada and the rate of exchange improves .

Good luck.

dbd33

Something wrong there. It's usual for banks in Canada to offer a provisional number "if the rate stays at n we'll lend you n, subject to the house being acceptable". I guess they'd call that a "pre-approval", if they didn't care about the language.

BristolUK

While this is for purchase in BC, the thread title may draw people in for anywhere so it's worth a reminder that it's not the same everywhere.

For example there was a suggestion that in BC take the assessed value and reduce that (10% was mentioned) to find the property value.
It's the other way around here in NB. I look occasionally and for most of those I look at the actual sold price (in the last year or so) is some way higher than the assessed value for the current year. You look at a few and just as you think you see a pattern, or formula, because the "real" price was, say, 30% higher than the assessed value suddenly there's one where the two figures are quite close and another even further apart.

And all this in the same area with similar properties.

Stuff here is selling quickly and the last I read was to offer at least 10% over asking.

On the point about offering 85% that might be a bit over optimistic but in a stable or perhaps more typical market it was quite normal to offer 95 to 97% and a seller might be willing to drop to 90% for a quick completion or after potential buyers had dropped out. I've experienced that when I sold a rental property. Remember, too, the seller "loses" about 5% in Realtor fees anyway (assuming that's still a typical rate). Also in a stable market the seller might well be satisfied with 90% and if the deal could be done without a selling Realtor then 85% and no fee is not a million miles different to 90% before the fee.

I'm not sure how many parts of Canada might be considered stable but in my time here there have been at least two periods of booms and a downturn and they haven't lurched from one to the other, there's been stability in between.

BristolUK

Hot off the press from my newspaper today. Properties in NB still selling fast and at much higher prices than over the last few years.

Elsewhere, homes selling at what is described as a discount.

Shard

Can't you get some stats on what houses are selling for as a % of asking price ? Either published or by asking several realtors. With that baseline you could gauge how cheeky your offer might be.

CanadaJimmy

Due to BC's dual agencies laws, many selling realtors are hesitant to accept offers if you don't use a buying realtor, so you will likely need a realtor to help you regardless.

I recommend using http://zealty.ca - if you create an account you can browse all the listings in the area, add favourites (so you will be notified when the price changes or they sell) and the best part is you can view all the selling prices which is invaluable for figuring out the direction the market is going and also spotting a good deal.

When I bought my house I knew it was a good deal because I'd been tracking all the selling prices of similar homes in the area.

Edit to add - BC assessment value isn't really very accurate a lot of the time, it doesn't factor in renovations or changes to the home for example, so if an ugly home with an original 1980s kitchen might be assessed similar to a well maintained home with a brand new kitchen.

BristolUK

Presumably the seller can decide to dispense with the services of a traditional realtor, though, and do it privately, just with a lawyer. Or with one of those other agencies that assist.

glendem4

House prices have gone crazy in the last 2 years. Boc are raising rates to cool inflation. I would wait as there will be bargains.

CanadaJimmy

Maybe. Most of the cooling right now is from people doing exactly that, waiting to see what happens now interest rates have risen. Remember people said the exact same thing about the B20 stress test. The fundamentals of the market (low housing supply) hasn’t changed so in the long run prices are still going to rise, and I’d say now is actually a buying opportunity imo. But of course you shouldn’t buy without being willing to take a hit in the short term, hold for 5-10years at least.