[caption id="attachment_2657" align="alignright" width="300"] Image Source: Tori Rector[/caption]
According to the Globe and Mail, bidding wars over Canadian properties are reaching new intensity levels. Mortgage interest rate cuts and concerns over the uncertain future of other investment vehicles will likely drive this trend further.
Here are parameters individuals should set for themselves when bidding and the best practices to secure Canadian properties.
Canada's major metro areas are reportedly seeing intense competition for well-located houses and condos. Some agents are reporting that this is extending negotiations to three or four rounds of bidding and increased offers.
Canadian homebuyers do need to be extremely careful not to let the frenzy and emotions cause them to over extend and end up in a contract and home, which they might not be able to afford, especially if adjustable rate mortgages could make their housing payments spike in the near future. However, there may be some justification for stretching a little in the current real estate landscape. For one, no one wants to be stuck in a home that they are paying hundreds of thousands of dollars for. Low interest rates, asset protection, wealth building and tax breaks could be sensible reasons to go a little higher when necessary.
Real Estate Investments
Competition over prime Canadian investment properties and commercial real estate has been almost equally hot. So much so, even the largest pension funds have had to go abroad to find properties to invest in, even if it means settling for lower yields.
Investments are even more important than housing. For those that can't buy their dream homes yet, commercial real estate investments are also the path to closing that gap. However, it is important not to overpay for real estate investment properties. An investment should produce positive returns and cash flow, not be a financial drain each month. Knowing your numbers and deciding in advance of the maximum figure can prevent overpaying and regrets.
Avoiding the Pitfalls of Bidding Wars
There are two solutions for avoiding the woes of getting into multiple bid situations for Canadian property investors and buyers. The first is to act the fastest. Know what you are looking for and be ready to act in minutes when the right opportunity arises so the competition doesn't even have the chance to bid.
The second is to participate in real estate partnerships in pre-negotiated off market commercial property deals. This leverages the speed and expertise of real estate insiders that are on the frontline and who can secure the best properties on the best terms before anyone else.