So far this year, Vancouver’s real estate market is experiencing a serious lack of inventory. Fewer homes are being listed for sale, and buyer demand is increasing steadily. What does this mean for the buyers and sellers who are actively in the market right now?
Sellers Are in the Driver’s Seat
When there are few properties on the market, and there is an abundance of buyers, sellers are in a put in a position of power. With many properties selling for above asking price, and moving quickly, homeowners can often afford to be more particular about the offers they accept than they might be in a slower market.
In practical terms, this often results in a seller receiving multiple aggressive, condition-free offers – typically with a hefty deposit attached. Interested buyers have to find ways to out-shine the competition and this frequently puts sellers in a position to receive offers well over asking price, and free of subjects like financing or inspection. This type of market scenario is not without its risks, however. A buyer may enter into a contract in good faith, but later not be able to fulfill their end of the deal for any number of reasons. Most often, financing falls through. If a collapse happens on a subject-free offer, the buyer forfeits their deposit, and the seller has to try to attract another buyer.
In the current market, some sellers are mitigating risk by looking at back-up offers for additional peace of mind. This means a seller accepts a second offer which is made by another buyer. Should the first offer fall through prior to subject removal, the back-up offer becomes active and the property goes to the second buyer.
Buyers Must Keep Pace with the Competition
The basic rules of economics tell us that when supply is down and demand is up, there will be plenty of competition for a product. This means that buyers in a hot market have to find ways to win when multiple offers are submitted on a single property.
The first way buyers try to out-gun the competition is by offering a higher price than other interested parties. This results in many properties selling for amounts far beyond the original asking price. In this scenario, it’s easy to see how Vancouver real estate prices keep increasing as a supply-starved market vies for precious few listings.
Buyers are also upping the appeal of their offers by foregoing typical conditions related to financing and, in some cases, inspection. While it’s always preferable to have a property inspected, the buyer has to decide whether getting the property is more important than the risk involved in skipping an inspection.
Other tactics for winning against other buyers include asking the listing agent what dates the sellers prefer and writing those dates into the offer. You can also include a larger-than-typical deposit to entice a seller to accept your offer over another. A typical deposit is between 5-10% of the sale price. Anything higher can be appealing to a seller. Finally, you can personalize your offer by including photos of your family or a handwritten note about why the property is perfect for your family.
Know Before You Go
Low inventory of properties definitely has a strong influence over the behaviour of both buyers and sellers in Vancouver’s real estate market. Educating yourself about what to expect and how to come out ahead in today’s market is a good strategy to help you meet your real estate goals regardless of market conditions.
Have Questions? I'm Here to Help
Feel free to contact me with any questions you may have about the Vancouver real estate market and how current conditions may affect you as a buyer or seller. You can reach me at 604-910-7777. I'm always happy to chat!