Home Buying, Real Estate News, Your Next Home
Industry watchers are unanimous, Metro Vancouver’s long overheated market is finally showing signs of cooling ever so slightly. And as the frenzy of bidding wars that saw properties sell in mere days for 15 or 20 percent over asking is abating, many developers are reintroducing a past staple of new home marketing — buyer incentives. In this post, we chat with Jamie Squires, our president, about some of the bonuses buyers might discover at a presentation centre.
Q: Prepaid strata fees used to be a fairly common incentive. Are these making a comeback?
Jamie: They are. Prepaid strata fees for one or two years have always been popular with buyers. The developer puts the money in a trust fund and the money is paid directly to the strata every month. The other option is to take an equivalent, lump sum payment that’s applied against the purchase price, which is a good option for many first-time buyers since it lowers the required down payment.
Q: What about mortgage buydowns now that interest rates are climbing far more rapidly than most people predicted?
Jamie: Again, we’re definitely seeing buy-downs return to the market. It’s important, however, to put this in perspective. Rising rates reduce buying power, but we’ve enjoyed historically low-interest rates for a number of years, so there was only one way for them to go. A variable mortgage has always been a gamble. One thing we’re encouraging buyers to do right now is get a blanket appraisal that locks in the rate until completion rather than just for three or four months. It’s not really a buyer incentive, but it is something people should be aware of.
Q: What are some of the other incentives you’re seeing in the market?
Jamie: Parking stalls prewired for an EV, a free air conditioning upgrade, appliance upgrades, and reduced or completely eliminating assignment fees are several incentives people seem to like. There was also one developer who gave every homeowner free avocado toast for a year in the coffee shop on the street. That was a funny one, but buyers liked it.
Q: What’s the most innovative incentive you’ve seen?
Jamie: There’s a condo development in Maple Ridge that’s offering a $1.00 deposit. Full details aren’t available yet, but I do find this one a bit concerning. Right now, it appears that to qualify, you need to own another home. I’d be worried buyers might have to take out a collateral or second mortgage on their first home. It’s definitely something you would need to be very, very cautious of and have an experienced real estate lawyer on board.
Q: Any final thoughts?
Jamie: Even with rising interest rates, now is a good time to be shopping for a new home. Developers are more open to negotiating. So, no matter what the advertised incentives are, when you go into a sales centre, think about asking for extras. And if there are two things you really want, for sample an EV parking space and air conditioning, ask for several other items, too. That way you can let some things go and everyone feels like they’ve won. Because win-win is always good.
Originally written for New Home + Condo Guide by Susan M Boyce
Home Buying, Real Estate News
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Home Buying, Real Estate News