October 25th 2022
The Scott Brothers Q&A: Buy, sell, or stay? Here’s what to consider before making a move in Canada’s real estate market
In this limited series, our investors and Canadian real estate industry experts — the Scott Brothers — answer Canada’s most burning real estate questions, which can help you buy, move, and sell with more confidence, and less stress.
You know the feeling. Maybe it settled in after you got that hard-earned promotion. Or maybe it’s when you noticed that your little one isn’t so little anymore. Whatever the reason, you’re asking yourself: “When did my home suddenly feel so small?”
When you’re ready to buy or sell your home, it’s hard to think of anything else. But how do you go from wanting to make The Move, to knowing that you’re ready to?
It can be as simple as planning ahead and considering:
- Your finances
- The larger real estate market (i.e. at the moment, is it better for buyers or sellers?)
- Why you want to buy or sell
- The state of your current home
Not sure whether you should buy, sell, or stay put right now? We've got you covered: we tapped real estate experts Drew and Jonathan Scott to dig into the key considerations you should be making when trying to figure out your next move.
Q. How do I know if it’s a good time to buy a new home?
You’ve thought about deposits and down payments — before you need them
Drew: Buying a home is a big emotional and financial investment and is likely one of the biggest commitments you’ll make in your life. Thinking and planning well ahead will help you decide whether you’re ready to buy now (or wait until later).
A good indicator that you’re ready to buy is being sure you can actually afford to. Saying ‘Yes, I’m ready!’ with confidence means checking off a few key boxes:
- You've saved enough for your deposit (which is the first cash payment you'll make to your seller — and is part of your down payment). It’s typically ~5% of the purchase price.
- You’ve saved enough for your down payment (the full cash payment you’ll provide to your mortgage lender to close on your dream home, including your deposit).
- You’ve saved enough for future monthly mortgage payments (and have budgeted out your payments, so you can meet them every time).
Tip: Before you start house hunting, chat with a trusted financial advisor to map out how much you need to save and how long that will take.
You have a realistic budget in place
Jonathan: Down payments and monthly mortgage payments are great to think about early on — but they’re just one part of a long list of expenses that come with buying a new place. Creating a forward-thinking budget that itemizes the down payment and deposit is certainly a good start. Have a budget that you’re certain you can meet? If so, then now may be a good time to buy.
What should you put on your budget checklist? Potential costs like land surveys, home appraisals, inspections, legal fees, mortgage insurance, moving costs, real estate agent fees, ongoing home maintenance costs, and any potential taxes (think land transfer tax). This will ensure you'll have fewer surprises once you kick-start the buying journey (bookmark this detailed list here).
But this isn't just about saving money — this part of the planning process is about getting crystal clear about having the money you need, and when you need it, for your future payments. This will help you know how and when you'll need to liquidate funds for cash, and will be key in knowing whether you should buy (and whether you can afford) your next home.
All signs point to a buyer’s market
Drew: With a budget and financial forecast in place and knowing exactly what you want out of your next or new home (as well as where you want that home to be!), it's time to take a step back and look at the bigger picture: a.k.a. the real estate market.
Ask yourself: is the market working in favour of buyers (where the number of listings on the market outweighs the number of homeowners looking to bid on them)? If so, you'll likely have less competition bidding on a home — keeping it closer to the listing price.
To get started, check TRREB or other local data that reveal list-to-sale price ratio trends. Our friends at Properly recently did a deep dive into this data which revealed that the difference between list price and sale price in the GTA is shrinking right now, meaning buyers can expect the list price to be more on par with the eventual sale price (i.e. list price means something again!).
Tip: You can still buy in a seller’s market — in fact, some do this outside of any market swings, and are pretty successful in doing so. That being said, it’s easier to buy when it’s easier to predict the selling price, and you don't have to worry about multiple bids that can drive up the eventual selling price of a home.
You know exactly what you want (and where)
Drew: Whether it’s a bungalow, a condo, a townhouse, or even a sprawling farm, knowing well in advance what type of home you want to buy will help you sift through the listings and increase your likelihood of seeing a dream property early in your home search. If you’re 90-100% certain about what you want, then you’re in an ideal position to think about buying your first or next home.
Another thing to consider is the timing of your move, and the location of your new home. Ask yourself, "Is this home surrounded by everything I need for a joyful, fulfilling life?" According to this Happiness Index, for homeowners in Toronto and Vancouver, access to outdoor space, recreation, schools, and restaurants are the top reasons why they love where they live.
But everyone is different, so be sure to customize your own list of must-haves for what you want. Think about this early on to make sure you end up in a new space you'll love, and whether you’re ready to buy now or later.
Tip: Another game-changing move? Tap a real estate expert to see what developments are planned for the neighbourhoods you’re interested in. This will give you a sense of potential changes to traffic volume, or upcoming construction projects that may mean a lot of detours on your commute.
You might also like: The Scott Brothers Q&A: How to decide WHERE to buy a house in Canada
Q. How do I know if it’s a good time to sell my home?
You’re sold on the idea that it’s a seller’s market
Drew: Only you can decide when it’s the right time to move – but, in a seller’s market, the conditions are working in your favour. You’ll know it’s a seller’s market if you and your neighbours are getting ‘Do you want to sell?’ letters from listing agents, and the “FOR SALE” signs on your street are quickly turning into “SOLD” ones. In a seller’s market, houses are in demand — which may make selling yours that much easier.
Your home value has increased
Jonathan: If you’re thinking about selling your home, you’ve probably thought about whether its value has increased. In a seller’s market, the increased demand for homes can make that all the more likely. An increase in value means when you sell your home, you’ll be able to unlock its equity, getting cash that you can budget towards your move.
To start tracking the value of your home, you can: 1. Contact a home appraiser who can help you understand how much equity is in your home, or 2. Get a free, quick, and easy instant estimate using Canada’s most accurate home estimate calculator.
Personal and professional factors are telling you “It’s time”
Drew: When it comes to real estate, people hold strong opinions. As you prepare to sell your home, you might suddenly find that friends and family are filled with suggestions, warnings, and golden rules that they insist you follow.
But this decision is yours. In choosing to sell your home, you’re investing in a big, beautiful change that takes a lot of work — but whose personal and professional rewards can last a lifetime.
As you navigate this period of transition, remember what these goals are: whether it’s downsizing so you have the means to travel the world, getting extra space to accommodate your growing family, moving from a multi-level to a single-level home to protect your knees (or at least shorten your trips to the laundry room), or getting closer to a career-transforming opportunity.
Q. How do I know if I should stay put?
There’s still work to be done
Jonathan: If you take a look around and notice a yard in serious need of TLC, or a home renovation project you abandoned somewhere along the way, it may be time to stall on selling, and hit “start” on sprucing up your space. Not only does this make for a more pleasant home tour experience for buyers, it also can add a lot of value to your home, and your eventual sale price.
Consider making some minor changes such as installing new windows, or undertaking more extensive renovations in key areas like your kitchen or main bathroom.
You might also like: The Scott Brothers Q&A: What increases the value of a house the most?
You’re still smitten with your current home and neighbourhood
Drew: You may be feeling pressured to sell because the market is working more in your favour, you’re looking to cash in on your home equity, or you simply need a change of scenery. Another thing to consider is how you really feel about your current home. Would you miss it if it was sold tomorrow?
Are there any minor renovations or other changes you could make that would have a significant impact on your decision to stay — and would only take a little more time to complete? While financial factors carry a lot of weight in your decision to sell, you should also take pause and wonder if you’re really ready to say goodbye to your current space.
Q. Whether I decide to buy, sell, or stay, are there other things I should be keeping in mind before making a move?
Tip: Really think about real estate agents
Jonathan: One of the most important relationships to nurture early in the home buying or selling process is the one you have with your real estate agent. To save you time, money, heartache, and headaches, it’s a great idea to pick someone you’d want to work with well into the future. If you’re not sure how exactly to figure out which agent is ‘the one’, you can check out our list of ice-breaker questions to ask an agent on ‘the first date’ — their answers will quickly tell you if this will be the beginning of a good working relationship.
Tip: Give yourself enough time, and information, to prepare
Drew: Like with any life-changing decision, buying, selling, or staying put requires a lot of research, forward thinking, and planning. Financial forecasting and budgeting, watching the market, and researching neighbourhoods (among other things) can certainly feel like a lot.
It’s obviously going to be a lot easier if you surround yourself with the right network of experts who can guide you on the path to the right decision. And you can breathe a sigh of relief: they’re ready to help you start your journey right now. For more basic home buying and selling tips, keep an eye on this blog, or connect with Properly’s real estate experts today.