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Gearing up for the spring real estate market in the shadow of COVID-19

Gearing up for the spring real estate market in the shadow of COVID-19

Exterior of brown two-storey home in spring real estate market

In February 2020, the real estate market was seeing increases in house prices, bidding wars, firm offers, and a whole lot of competition when it came to buying a home in Barrie and the surrounding area. Now looking ahead after the rise of COVID-19 and on-going; lockdowns and lay-offs, the market has cooled faster than a hot pancake in a Canadian snowstorm. Where is the positive in that? Well, for first-time homebuyers who never stood a chance in high-roller bidding wars, the tables have turned, creating a buyer’s market instead of the steady seller’s market that was.

The question stands though, how do you best prepare to land your first-home in times where you can only virtually tour a home, and you’ve got a ton of questions as you’ve never bought a home before. And, how do you make sure you’re purchase is not only worth the value you’re paying for it, but, a good investment at that?

With years of experience helping first-time homebuyers secure their first mortgage to get out of rentals and into a house they can call home these are the things I would recommend keeping in mind while hunting for opportunities in the midst of COVID-19.

Avoid paying too much & don’t overbuy or max yourself out – anything could happen this year

As I’ve mentioned previously, the real estate market and the value of homes have shifted but, that doesn’t mean realtors have suggested dropping the prices of homes that have been on the market before this virus hit. That means that a home that was a little overpriced when it was listed late last year or earlier this year even, may be a little too rich for the current market. When it comes to looking at home prices, I’d look at homes in a wider price range within reason because sellers might be a little more incentivized to drop their asking price because they really need to move, and they’re likely more open to negotiating an offer now, opposed to where they might have stood in the past few months.

Avoid buyer’s remorse

A virtual tour of a home, isn’t at all like, taking a physical tour of a home, especially when it’s your first home and you’re in the honeymoon phase of your house hunt, where every home you see is “perfect” emotionally. If you do purchase a home in the coming months through a virtual tour, make sure you ask lots of questions about the home, ask for multiple photos of each room, ask to see what’s in the closet, ask the realtor while face-timing “can you open that door over there, I want to see what’s behind it”. Also, don’t hesitate to ask them “does that look like water damage” or similar questions. You want to make sure that the home you decide to buy, isn’t like that pair of shoes you thought you loved at the store, but, when you got them home, never wore them, and wished you never bought them, to begin with. Unfortunately, even in these times, once a deal is done, you are on the hook. You can’t return a house to the store because it wasn’t exactly what you thought.

There are deals to take advantage of

It is unfortunate for many that layoffs have made a big impact on not only their income but their ability to carry a heavy mortgage too. In some cases, homes are being listed because the financial weight is too much to bear in their current situation so they are forced to sell. Others might be going through a divorce and need to sell. Some sellers might have bought a home before COVID-19 and have to sell their current home because they can’t carry both mortgages until the market shifts towards similar home

prices. And as buyers largely retreated once the lockdown and layoffs started happening, there are more sellers than buyers currently, and agents are reluctant to take on new listings without the homeowner have an urgent reason to sell because they don’t want to go into many homes, in order to protect themselves. That being said, when people are motivated to sell for financial reasons, they’re more open to negotiation on price and being flexible on other details as well.

Make sure your income is solid before buying

Although, there may be deals to be had, before you even think about buying in this market, make sure your income is rock-solid. You will need proof of income to secure a mortgage with a lender, and you’ll still need your down payment upfront, which can’t be borrowed from the bank. We are also not sure how the rest of 2020 will pan out yet. Much has been shut down for over a month now, and although you have your job now, will you have it in 3 months, 6 months, a year? And, if so, will adding another payment into your cashflow plan be easy, or will it mean you will just barely squeak by? Because, if you thought being quarantined was tough, you don’t want to know what being mortgage broke, and quarantined will feel like. Even though you don’t have anywhere to go, you need to make sure your bases are well covered so you can alleviate any added stress of making mortgage payments that are outside of your comfort zone.

Get pre-approved to lock in a low rate now, while things are low

Speaking of mortgage payment stressors, the best way to make sure you can afford that mortgage, and that you’re hunting for homes in the right price range is to get pre-approved for the mortgage you want ahead of your house hunt. That way you have the confidence in knowing you won’t be stretched financially and that you’re not just window shopping for homes outside your price range unnecessarily. Another benefit of getting pre-approved at the moment is that rates have dropped and you can lock in for up to 90 days with a pre-approval. That means whether the rates go up or not, you know you’ve got a great rate in terms of lending, and if the rate drops lower since securing your pre-approval you’ll still be able to take advantage of that too.

Make sure you can get a home inspection done

This one I can’t stress enough for first-time homebuyers, and any home buyer for that matter. When you buy a home without physically seeing it yourself, you’ll want to rely on trusted professionals for their opinion. A good home inspector should be able to tell you if the structure is sound if there has been water damage or mold issues if the roof has issues or the foundation is cracked and is something to worry about. The biggest hitch right now with home inspections is that some home inspectors aren’t operating, or are running limited inspections because of safety measures, and some companies have temporarily suspended operations all together. So, after you hunt for your dream home, you may also be left hunting for a trusted home inspector who is willing and able to take a look for you. Also, when they do go out, they might not be quite as thorough as they typically would because of the COVID-19 safety measures they are taking to protect their teams and the homeowners.

Buying a home in this interesting time is possible, and there are going to be deals to be had for homebuyers in all price ranges but as the rules and economy shifts so does the mortgage and real estate landscape. If you’re thinking of buying your first-time or perhaps an investment property or cottage, give

me a call at 705-315-0516, and let’s virtually work through the details of your specific finances so we can secure the mortgage pre-approval you need to hit the spring market running.

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