3 Ways to Avoid Overpaying in Alberta’s Seller’s Market

With housing inventory in Alberta at its lowest since 2006, overbidding is a natural consequence of the supply/demand lever. Here’s how you can avoid it.

By Brett Surbey | 3 minute read

Overbidding is becoming an issue in major metro areas in Alberta, like Calgary and Edmonton.

The Alberta housing market is gearing up to be a seller’s paradise this fall, with September inventory levels at their lowest since 2006, according to the Alberta Real Estate Association. This combination of low inventory and limited growth in new listings has kept Alberta’s sales-to new-listings ratio (S/NL) high: it currently sits around 71%. Some areas, such as Calgary and Red Deer, have even higher year-to-date S/NL percentages—clocking in at 79% and 80%, respectively.

This concoction of low inventory and persistent demand means homebuyers likely will compete for a piece of the real estate pie. But how can homebuyers avoid paying well over the value of a home or financially extend themselves? 

1. Know Your Limits 

“Emotion comes to play in all of this,” says Steven Lubiarz, a REALTOR® and certified condo specialist with Greater Calgary Real Estate. In his experience, he knows people get excited about buying a home, but understanding their budget before taking the purchase leap is critical. “We have to stay level headed about things and say, ‘Look I can only afford so much.’ Going above that [financial threshold] is when people get into trouble.”

Lubiarz notes that while understanding your top price point is important, homebuyers should not forget non-economic factors too — like their priorities, goals, property location and community. Sometimes, these factors outweigh the price considerations and waiting might be the best option. “There will be homes that come up. The market is cyclical and it will change. If people have patience and fortitude, it’s doable,” he tells Wahi.

2. Get Your Ducks in a Row 

Getting prepared for a potential offer, rather than diving in headfirst, can be a tough pill to swallow, especially in a scarce market. Eager homebuyers can quickly feel like they’re missing out on potential homes by not putting an offer in as soon as possible. In a market like this, Lubiarz knows the feeling — but also knows to act against it.

 “Sometimes people do go into the process of purchasing and get a little too excited: they don’t have any pre-approvals or they haven’t done their due diligence, which unfortunately might be a time waster for both seller and buyer,” Lubiarz notes.

3. Find Points of Leverage

Just because you can’t compete on price doesn’t mean you don’t have anything else to enhance your offer, Lubiarz has noticed in his practice. While price point is one of the major factors in a market like this, the Calgary REALTOR® thinks that there are other factors worth considering, such as conditions. 

“You can try to have as few conditions as possible,” Lubiarz recommends. And he’s even seen some buyers going into purchases with no conditions whatsoever in an effort to put their best foot forward. Lubiarz personally does not recommend this to clients because, “there’s a possibility you’re purchasing a home without a home inspection.” It’s important buyers know exactly what they’re getting into, regardless of the cost. 

A more moderate option is to shorten the timeframe for conditions that you have in place, like financing or a home inspection. In cases of home inspections in particular, Lubiarz notes that, “[Closing] the gap between the time that you’re going to put a condition date and when the condition is due” can make your offer more favourable to sellers. 

For those who have the liquidity, another strategy is to put down a larger deposit that makes up some of the purchase price, or even a secondary deposit. “This shows good faith,” Lubiarz says. Additionally, buyers could also divide their deposits into two payments, split between after the offer acceptance and after conditions have been waived, he explains. These bona fide acts can potentially highlight a willingness to be a good business partner in a market saturated with talk of dollars and cents. 

Lubiarz recounts one of his clients sending a personal letter to the seller, indicating they had received pre-approval for financing. Sometimes, thinking outside of the box of economics can go a long way.