It’s a time in our lives we try not to dwell on, and yet, it’s also a lesson we won’t soon forget.
That time we entered two bidding wars on homes for sale… and lost.
Thinking back, I recall the sense of urgency we felt when we first found what we believed to be our “forever home”. In a booming neighbourhood, close to the best schools and just the right modern styling to suit our tastes, it was love at first sight – and we fell, hard. As fates would have it, a similar property was also for sale, just one street over – ensuring we’d have two chances to score the home of our dreams.
“You should visit soon. Homes like this sell on average in 3 days. There is an 75% chance that this home will be sold within one week of listing.”
Okay, no pressure. I mean, I wasn’t quite ready to pack up my house, but of course we’d find a way. And since the boys were still relatively young, changing schools wouldn’t necessarily impact their social development.
“Expect to bid higher. 5 out of 10 homes like this one have sold over asking.”
Um, alright. The home was already about 20% more than I wanted to spend, but come on, this was THE home. Our home. We were prepared to put in an offer for the asking price – surely that would mean a quick sale?
“You’re unlikely to get a deal. Only 2 in 100 homes like this sell below 93% of asking.”
Wow. So this reaffirmed what we already knew – it was a hot property in a hot neighbourhood. With every hour that passed after we submitted our offer, my sense of FOMO increased. I had to have this home. I would beg, borrow or steal to get it.
In the end, we lost both homes to overzealous bidders who offered more than 10% above asking price. For a while, I was crushed… but then I realized that in order to secure the home(s), I would have had to move out of my financial comfort range – a decision (and ensuing mortgage) that would be my responsibility for years to come. This year, we’re once again house hunting, but I’m much more prepared to think rationally, with my budget in mind, and without FOMO driving my purchase decision.
With the Canadian housing market more competitive than ever, and home prices continuing to rise in cities like Vancouver and Toronto, a recent TD survey found that Canadians are rushing into buying a home for fear of missing out on an opportunity. In fact, the survey found that 19 per cent of Vancouverite and Torontonian homeowners listed FOMO as a top consideration before making their first home purchase.
(I get it, I really do. There’s nothing quite like being introduced to your dream home… and then realizing it’s also the dream home for 8 other prospective buyers.)
In this market especially, it’s critical to understand the full cost of buying a home upfront – especially since 40% of Canadian potential first-time home buyers are worried they simply don’t understand what’s involved! Remember, there’s more to consider beyond purchase price, interest rate and the monthly mortgage payment.
So, how can you find the right balance between managing your mortgage and your lifestyle? TD Bank offers a few pieces of advice:
1. If you’re house hunting this spring, make it a goal to learn as much as possible about mortgage rules and the on-going commitment of home ownership, even before hitting open houses where it’s possible to get caught up in the fear of missing out.
2. A mortgage specialist can help navigate the often complex financial aspects of buying a home, like helping to understand how much you can comfortably afford; the overall cost of home ownership; mortgage options to you; and the benefits of a bigger down payment.
3. Don’t rush the process because you’re worried about being pushed out of the market. Believe me, I’ve been there – and could have signed away my life for his-and-her walk-in closets and a cold storage cellar.
The single best way for you to avoid over-extending yourself in a competitive housing market is to understand all the costs involved with buying a home, and how much you can comfortably afford before hitting open houses.
This spring, if you’re house-hunting around the GTA, you may just run into me! Tell me – are you currently living in your “forever home”? Are you in the market to make a move?
This post is sponsored by TD Canada. The opinions on this blog, as always, are my own.