Buyers have the advantage in today’s market

If you are in the market to purchase a home, the COVID-19 pandemic may have actually done you a favour. Prior to the lockdown, home sales in Toronto were still going strong and bidding wars often resulted in homes being sold for above asking price.

The pandemic however caused many buyers and sellers to sit on the sidelines and wait it out. In fact, in April of this year Canadians saw their lowest home sales numbers in 36 years, and although we did not see a corresponding drop in listing prices, we are not seeing those bidding wars right now either.[i] According to a Canadian Press report, home sales in the GTA were down by 65%.[ii]

Home sales in process prior to COVID-19

For transactions that were already in process prior to the lockdown, it has left many buyers in dire financial straits. Many buyers may have suddenly found themselves unemployed or furloughed and without warning which left them without financing and unable to meet their contractual obligations.

Purchasers responsible for a collapsed deal – whether it was intentional or not – will have to forfeit their deposits and might even have to make up the shortfall if the sellers sells at a lower price. The only way that either buyer or seller could back out of the Agreement of Purchase and Sale (APS) is if there is a provision within the contract itself to do so.

What does this mean for new Canadian homebuyers entering the market?

The plunge in home sales means that could be an ideal time to purchase a home since much of the competition has been frightened out of the market. Buyers looking to take advantage of this however should not delay. Economists from RBC are predicting that this buyers’ market is temporary and will only last as long as the effects of COVId-19 are being felt. Furthermore, they are predicting that we will see a 40% surge in home sales over the course of 2021.[iii]

In addition to possibly being able to get a better price on a home, buyers who purchase a home right now may be able to negotiate more flexible terms in the APS. For example, they may be able to negotiate that they can get out of the deal if they lose their financing within a certain timeframe. Or it may be possible to include a clause which allows the deal to be postponed in the event that the buyer or a member of their family become ill with coronavirus.

How we can help.

COVID-19 may have provided a perfect window of opportunity if you are currently looking to purchase a home, but due to many uncertainties about the virus and its effect on the economy, it is more important than ever to have a good real estate lawyer on your side. If you are considering making an offer on a property, talk to a member of our team first. We can help ensure that your APS contains provisions to protect you. Call us today for a consultation.