Real estate overheating: how to fare well in the current market

Sellers and first-time buyers have their heads spinning these days. The rise in prices and interest rates and the speed with which properties find takers, often following the filing of multiple offers, make the exercise particularly complex. More than ever, professional advice is necessary for a successful transaction.

Property prices, as we know, have exploded in all regions of Quebec. For all sorts of reasons, including the emergence of telecommuting, people have opted for a sedentary lifestyle and home-shelter, which has had an impact on the number of properties for sale and the volume of transactions. Also, the Bank of Canada’s monetary policy, which kept interest rates at a historic low before inflation forced it to raise them recently by 1%, prompted buyers to rush to the market. The imbalance between too low supply and too high demand inevitably causes a rise in prices and the phenomenon of overheating that we are currently experiencing.
The Professional Association of Quebec Real Estate Brokers (APCIQ) has just released the most recent statistics for the residential real estate market, which are based on the provincial Centris database. In the first quarter of 2022, the median price of a single-family home in Quebec was $415,444, up 22%. Listings with real estate brokers for the same type of property, for their part, were down 22%, with average selling times of 46 days, 20 less than the previous year. According to the analysis, it is not uncommon for properties to sell in less than a week, and to receive multiple bids with higher bids, which has the effect of driving up sales prices significantly. The picture is similar for condos and multi-unit buildings.

How to put the odds on your side
Any real estate transaction is a complex affair, and not only because of the financial stakes. It is necessary to know, and even master the parameters of the market – especially in the current context – to control to your advantage the technical and legal aspects during a negotiation. This is why choosing a real estate broker, trained to act as an intermediary between buyers and sellers, is so important.
The broker acts as a guide throughout the sales process, by applying the ethical rules related to his work. This trusted person allows both sellers and buyers to achieve the best transaction, while enjoying the protection of the provisions of the Real Estate Brokerage Act. In addition to advising his clients throughout the buying or selling process, the broker can refer them to professionals, such as appraisers and inspectors, with whom he will have forged ties in the performance of his duties. Important information to note: these professionals must hold a license from the Organisme d’autoréglementation du courtage immobilier au Québec (OACIQ), which oversees their practice to protect the public.

A tailor-made service
Among the services offered by the professional broker, there is the evaluation of the property according to, in particular, its location, the planning of visits and the management of calls, the supervision of the pre-purchase inspection and the certificate of location, as well as as the real estate transaction history of the property for sale and properties in the same area. Not to mention the drafting of documents such as offers or promises to purchase and the seller’s declaration.
Buyers who are shopping for a property in a hot period must take into account a multitude of factors before outbidding and making a risky compulsive purchase by forgoing, for example, the pre-purchase inspection. In such a stressful context, the advice of experts – appraisers, building inspectors, real estate and mortgage brokers – is reassuring and facilitates the happy conclusion of what will be for many the transaction of a lifetime. It is important to note that the services of a broker are free for buyers.
The broker’s commission, borne entirely by the seller, can vary from agent to agent and is generally between 4% and 7%. It is therefore in the seller’s best interest to shop around with his broker, because a difference of just 1% translates into hard cash in a hot market. Good to know: the commission percentage can be negotiated downwards when the seller has a quality property that will sell quickly, reducing the time invested by the broker in the selling process.

A good evaluation counts!
For both sellers and buyers, the value of a property is difficult to determine in the current context. Prices have increased by 20 to 30% in some areas, and it is more than ever recommended to use an expert to determine a fair market value. In addition, the overbidding and the fierce competition between buyers with multiple offers have the effect of making the municipal assessments of properties totally outdated. In fact, these represent the market values ​​18 months before the entry into force of the municipal assessment roll. Consequently, the municipal assessment and the market value of a property are two very distinct things, and only a seasoned real estate broker or a professional appraiser can decide between all of this.

Quotations Brokers is a free real estate platform that allows buyers and sellers to compete with the best brokers in their region. With a network of more than 250 partner brokers, they have already put more than 100,000 sellers and buyers in contact with the best real estate agents in Quebec.

This content was produced by Le Devoir’s special publications team in collaboration with the advertiser. Le Devoir’s editorial team had no role in the production of this content.