If you follow me on Instagram you may have already seen me talking and sharing about Adam and I’s journey with buying a house for the first time. What you may not know is that we finally won a bid! After months of searching and placing numerous bids, we finally came out on top and will be taking possession of our first home on my birthday! The icing on the cake for me though is that we scored a detached Victorian in one of the most coveted downtown neighborhoods in Toronto, Canada! I still can’t believe it!
Although I am thrilled to end this part of our journey victorious, it has not been easy! As a matter of fact, there were plenty of disheartening and heartbreaking moments which at times made me question whether we should throw in the towel. Looking back, there were definitely a few things I wished I had been more mentally prepared for as a first-time home buyer in Canada. For one, I wish someone told me that buying your first home is hard but buying a home in one of the most competitive real estate markets in Canada is even harder!
The Toronto housing market has been hot for a while but this year with the looming effects of COVID, lack of supply, high renovation costs, and low mortgage rates, the 2021 market saw a 21% increase in the average home price, which brought the average Toronto home from $900K to $1.1 million in 1 year. Additionally, I wish someone had warned me about the frustrations of skyrocketing prices thanks to ‘blind bidding’ wars (when a buyer makes an offer on a home without details of other competing offers), which in our experience lead to houses going 500K over asking! Further, because realtors want to capitalize on bidding wars for their clients, they will list a house lower than the house is worth just to create the frenzied environment they want. Had someone taken me by the shoulders and shaken the naivety out of me I probably could have saved myself from numerous sleepless nights, getting too attached, and bouts of elevated anxiety and stress, but alas here we are! That is why I thought I’d share a few ‘tips for first time home buyers’ with you so that you can go into one of the biggest purchases decision of your life a little more mentally prepared and level-headed than I was and avoid feeling hopeless about buying a house.
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- 5 Tips To Mentally Prepare You For Buying Your First Home -
1. Buying a house is kind of like dating
Chances are you won’t end up marrying the first person you date in high school, right! Well, the same thing goes for houses! In total, Adam and I ended up bidding on 11 houses, 10 of which we didn’t even make a shortlist (when the seller’s agent contacts the top bidders to see if they can improve their offers)! The number of houses we bid on would have been higher but Adam talked me out of placing bids on two houses for one reason or another, and although both those houses did end up selling within our price range (imagine my frustration at the time having to watch them pass me by) in hindsight I realized that he was right and that I would have been settling for a house in a neighborhood that left something to be desired instead of holding out for ‘the one’. DID YOU HEAR THAT ADAM?! I SAID YOU WERE RIGHT! LOL.
I guess what I’m trying to say is that buying a house is like dating - expect to match with a bunch of potentials, fall in love a few times, back out once or twice, get your heart broken when you are outbid, only to have to brush yourself off, get back up and continue looking. Seriously though, it’s okay to step back for a few weeks and take a break from house hunting when you start to feel like you are losing hope like Adam and I did once or twice…. there will always be another slew of new houses out there in a few weeks and sometimes it’s better to take a break than give up, or worse, settle!
2. Buckle up!
On that note, buckle up because you’ve got a long journey ahead!
When Adam and I started our house hunting journey, I anticipated figuring out finances, finding the perfect house, and moving in would take 3-4 months tops and boy was I wrong! Adam and I started looking at the beginning of February and only in mid-end June 2021 successfully won a bid. In that time we saw nearly 50 houses, 90% of which fit my desired style (Victorian).
The thing is, even when you win a bid, most sellers want 60-90 days before they hand over possession of the house, so right there you’re adding 2-3 months to your timeline. In fact, it was only in the midst of our journey that I learned it had taken some of my friends close to a year to find their first house let alone move in! The point is, buckle up and prepare yourself for a long ride ahead especially in competitive markets like Toronto where you will have a lot of competition. I remember one house we bid on had 27 offers which apparently is not uncommon these days when there is a limited supply, especially during the winter months.
According to my mom, who is a licensed real estate agent and helped us with our first time home purchase, the housing market gets more competitive during the winter months (Dec-March) when supply is limited and cools in the summer months (June - August) when supply is at its highest. Additionally, spring (April - May) and fall (Sept - Nov) can also be competitive as there is still a transitioning amount of supply (although better than winter months). However, families with children are generally looking to buy in the spring and move during the summer in order to have their kids settled before school starts in September. For this reason, the market gets a bit more competitive in the spring. Regardless, paying attention to the season and the number of new listings could help your chances of being shortlisted when bidding in a competitive market.
A Timeline for Buying A House For The First Time
3. Roll the dice and play the game
As a first time homebuyer trying to buy a house in Toronto - the city I was born and raised in! - one thing this experience taught me was that the housing market in Toronto is F*$ked! There is no way that people my age will be able to purchase a home in the city in the future if prices keep going up the way they have been unless they and their partner/spouse have a combination of two or more of the following: two very strong income streams, are already sitting on a nice nest egg (like I was with my condo), are getting a bit of money from their parents, are willing to lose a large chunk of their paycheck to mortgage payments or are willing to rent out part of the home to subsidize their mortgage payments.
Further, agents have been listing homes below market value across the city in order to entice bidding wars, so it’s not uncommon to see houses listed in your price range (or even for $1 in some cases!) sell way over the listing price. Towards the end of our journey, both Adam and I realized that the listing price means nothing anymore, that’s why you have to think of putting in an offer as playing a game. Instead of looking at the listing and trying to figure out a realistic number to offer that you feel comfortable with, you have to focus more on ‘comparables’ (houses in the same general area that have the same number of bedrooms, bathrooms, and lot size, etc.) to see what a more realistic value for the house is. Obviously, if it doesn’t have parking, a finished basement, a potential rental unit, or the same number of floors, it could decrease the value of the home, but in a competitive market where the listing prices don’t mean anything anymore, it can become a skill to correctly figure out what a house will go for. That is why you should look at it as playing a game! Bet what you feel comfortable with on the houses you want even if it’s below the asking price because you never know! We saw houses listed only to be terminated and relisted 3-4 times before selling below asking!
You could also play the waiting game and wait till summer when supply is highest and delusional sellers (often propped up by their overpromising agents) calm down or get desperate, and submit a bid based on what you think the house is worth (according to comparables) or what it’s worth to you. Either way, don’t worry too much about offending the listing agent with a lowball offer. The worst thing that can happen is you forfeit the $10 you spent on getting a bank draft (we submitted a photo of one with all our offers to make it more enticing - as trivial as that sounds), don’t win the bid or they come back to you and ask you (or everyone who submitted an offer in one case for us *such a slimy move in my opinion*) to improve, at which point you can still walk away as we did once or twice.
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4. Stick to your guns!
With that in mind, remember to stick to your guns! If you’ve submitted a fair bid or even a pretty good bid on a home only for the selling agent to come back and ask you to improve, you can and should say no if you don’t feel comfortable. Like I said before, in two weeks’ time, there will be a whole new slew of houses on the market and the one you just lost out on will be a thing of the past. Agents are in it to get the most out of the sale for their clients, so don’t get offended or discouraged when they come back to you with a cheeky remark. Instead, stick to your guns because there is nothing they can say that will make you feel worse than overpaying for a house!
The same goes for the type of house you want! I knew I wanted a Victorian and although I did entertain Adam and my mom once or twice to see houses that weren’t Victorians, I rarely like them and wanted to move forward with them. In the 1-2 cases where we did, the price and location were so great it would have been too great of an investment opportunity to pass up (although I will admit, I was certainly relieved when we didn’t win)!
The point is, if you know what kind of house you want, stick to your guns because odds are 1) you’ll waste less time if you have a narrow search vs. a wide search (i.e. a specific neighborhood or a type of architecture style) 2) you’ll be able to pick up some interior design ideas for similar spaces to what you inevitably will end up with, and 3) it’s only a matter of time before you do win a bid, so make sure you stick to your guns and get the house you REALLY want!
SOME OF THE VICTORIAN HOUSES WE WENT TO SEE IN TORONTO
5. Take advantage of holidays, snowstorms, etc.
I swear, one of the reasons Adam and I won our detached home was because it was listed 2-4 days before Fathers Day, and offer night was the Monday after. In total, there were 6 bids which, although it was not the lowest number we had seen, was still pretty good! If you want to have less competition on a house, take advantage of holidays like Mother Day, Fathers Day, Canada Day (or 4th of July for those in the US), Labour Day, etc., especially in the summer when people will be outside enjoying the nice weather or heading up to the cottage. Alternatively, I’ve heard from friends that snowstorms in the winter can cause the same effect! Regardless, the fewer people that view the house the higher the chances you will experience less competition which automatically makes your bid more competitive!
I hope you enjoyed this blog post about tips for first time home buyers and my experience buying my first home. I hope it helps you avoid feeling hopeless about buying a house as well as severe anxiety about buying a house. If you have any comments or questions about buying a house for the first time, or want me to write about other topics that could help you figure out how to prepare to buy a house, please feel free to leave them in the comment section below.
