How REALTORS® Can Get Homebuyers off the Sidelines

The prospect of even lower interest rates has some would-be homebuyers on standby, but there are ways to shake some into the real estate market.

By Josh Sherman | 4 minute read

While it’s been a sizzling summer for Canada with heat waves sweeping across provinces, those who work in real estate know the country’s housing market has been anything but hot.

With the exception of Calgary, a summer freeze has set in major Canadian housing markets from coast to coast.

One of the most common challenges facing Realtors in this environment: many buyers are waiting for interest rates to come down further despite back-to-back cuts from the Bank of Canada in June and July.

On the seller side, meanwhile, some homeowners refuse to budge on pricing, and the stubbornness is exacerbating the market standstill. “There’s always a gap between what sellers think the market is, and what buyers think it is, but now, I’ve never seen it bigger,” says Wahi Partner Realtor Grant Allardyce.

The slowdown has created a tough situation for the 160,000-plus real estate brokers, agents, and salespeople in Canada.

So how can Realtors encourage clients who are standing on the sidelines to finally take the leap and begin house hunting? It’s all about having the right conversations. “I think you have to approach every client with as much open and honest information as you can,” says Allardyce.

With this in mind, Allardyce shares five talking points that Realtors should bring up to clients who are delaying their homebuying journeys in hopes of lower rates.

1. Today’s homebuyers have more security

With bidding wars relatively rare, there’s a better chance homebuyers can make conditional offers. Appeal to clients with the piece of mind and security that come with conditions. “Now you can come in with a home inspection. Now you can come in with a finance clause. Two years ago, you would’ve lost every single time with those conditions,” says Allardyce.

2. They also have more choice

Another knock-on effect of less competition in the market is listings are piling up. According to the Canadian Real Estate Association, listings totalled about 180,000 at the end of June, up 26% from a year ago. “You have got a lot of product,” says Allardyce. Remind clients of this. Tell them that they can really shop around and be a lot pickier than in previous years. With inventory levels high and rising, homebuyers have a better chance of finding the property that checks all (or at least most!) of the boxes.

3. Buying today could save you big money despite higher interest rates

It once again boils down to competition — or lack thereof. “In a lot of cases, if you do the math, it’s actually cheaper in the long-run to get in [the market] now,”  says Allardyce. “You’re not fighting multiple offers and you are looking at more of a balanced market,” he says to tell clients. In the mortgage market, fixed rates are trending downward. When rates decline further, homebuyers may quickly find themselves in bidding wars. Such competition can drive home prices up by $100,000 or more, easily erasing any savings from lower mortgage payments for a few years. That’s where the old saying, “marry the house, date the rate” comes in.

4. Financing is potentially easier before the fall market

If a client is on a tight budget and concerned about getting approved for a mortgage, let them know that it potentially gets harder to qualify as the year goes on, meaning they may want to jump in before the fall market takes off. “If you’re in Q4 and the banks have already made their budgets and you’re a borderline client on affordability, there’s more of a chance they’re going to deny your application,” Allardyce explains.  “If it’s Q1 and they’re trying to build their profits, build their budgets then they might be more inclined to approve your application.”

5. Consider Condos

Clients in the market for single-family homes may notice that those listed at the lower end of the price spectrum are still attracting considerable attention. This is true even in slower markets, such as Toronto. First-time homebuyers may find this particularly frustrating after reading so many headlines about a market downturn.

For these clients, try pitching condos even if they’re committed to the idea of a single-family home right now. “Somebody who is trying to get into real estate, right now the condo market is the way to go because you’ve got to look at it like a ladder,” says Allardyce. “You start at the condo, you flip the condo for the townhome, you flip the townhome for the semi, and then, eventually, you get to your dream detached home.”