Potential Buyers?

Ok, lets say we think the market has peaked.. lets assume we have a few months to sell our condo investment property and lock in some gains before prices start to drop. What sort of buyers are out there?

TYPE 1 – BUYS AT ANY PRICE
Type 1 has got to have it. They will buy your home at any price. Maybe they’re freaked out about being priced out of the market. Perhaps they are very very wealthy and desire Vancouver above all other cities in the world, or maybe they’ve won the lottery and money is no object for them. You want at least two of these type 1 buyers interested in your house or condo. They’ll bid up each others price and will never insist on sticky points like ‘subject to inspection’ and ‘subject to financing’. These are the people that will make you money. Hunt them down and keep them close to you.

TYPE2 – BUYING AT A PRICE
Type 2 will buy, but not at any price. These people are typically refered to as bears. They want to buy, but they have a limit to how much they are willing to pay. They’re looking for something specific priced below a certain level. They’ll crunch numbers and think long and hard before buying. These people will be your fallback position if you can’t find any TYPE1 buyers out there to make you stinking rich. As long as you didn’t buy within the last two years you’ll probably be able to make some money off of this type of buyer, at the very least you’ll be able to get most of your principle out of your property to make that money available for other uses.

TYPE3 – NOT BUYING
These are the bastards you have to watch out for. These people aren’t keeping an eye on prices or perusing the MLS. They don’t even know what current house prices are. They have no interest in the Vancouver Real estate market and the only way they’ll buy anything is if they win the lottery or have a rich aunt kick the bucket and leave them a bucket of cash. Maybe they’re still in highschool. Maybe they’ve allready bought a place. Maybe they are bankrupt and planning to move out of vancouver in the next year. Maybe they’ve attained a level of spiritual nirvana that leaves them uninterested in worldly possessions. Whatever the reason for their lack of interest, they aren’t really a factor in the price of your home. Shun these people. Yell at them when you see them on the street. They will ruin our economy and they will destroy our property values.

So where is the market now? what percentage of the population is type 1? What percentage is type 2? The number of house and condo sales have dropped in the last couple of months from the previous two years and inventory is up, but maybe the majority of type 1‘s just happened to take the last couple of months off and traveled away from Vancouver. Any estimates for the current population breakdown? And where will we find future type 1‘s to keep the money train going uphill?

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Freako
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Freako

Here's my estimate for September's breakdown:type 1: 10%type 2: 40%type 3: 50%Let's get this straight. What are we talking about? The population of renters?In either case, it is worth pointing out that while it looks like a lot of activity out there, a small percentage of the housing stock is for sale at any given time. Therefore, all the action is at the margin. Assuming that your assumption of 10% Type 1 is correct, and increase to 13% can shoot prices to the sky. Inversely, a decrease to 7% can send prices plummeting.

northshorn
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northshorn

Nah- in a way I feel bad for him, I think people get swept up in the emotion of it all and really believe that they will get priced out. It's ignorant, but as far as I know ignorance isn't a crime…I do think you could have sold a lot of bridges and swamps earlier this summer though.

Anonymous
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Anonymous

NorthshornCan you get me in touch with that buyer? I have a bridge and swamp to sell him.

northshorn
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northshorn

Yep – I've seen this first hand. Until recently I was renting a 100 year old house, it definately had some issues but the location and low low rent was great. The new owner bought for $150,000 OVER the asking price with NO SUBJECTS. In the couple of months that they were my property manager I watched their energy change from excitement over buying the house to dread as they found out the extent of work that had to go into it just to get it insured. rewiring, asbestos removal, oil tank removal, rot, etc.I just remember him shaking his head and saying "I wish I hadn't done this". The weird thing is the house has been empty for months now and no work has started.. I wonder whats going on there?

Anonymous
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Anonymous

MANY MANY MANY people have been making offers with no subjects. You see this time and time again even for older homes, which is a nutso roll of the dice. I think in a lot of situations sellers have taken lower offers that have no subjects over higher offers with subjects, simply to ensure the sale goes through. I've lost in bidding wars a few times to bidders with "clean" (no subject)offers. On a 75 year old home that clearly has problems, you've gotta be crazy.

rtype
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rtype

I always thought that the only way you would make an offer with no subjects is if you were planning on tearing down the house and you knew that there were no leans against the property.Are many peope making offers with no subjects?! Is this going to rear its ugly head in the future as leaky condo crisis part 2?

Anonymous
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Anonymous

"I basically walked through the whole process blindfolded and with no stress at all."Yow. You just gave my stomach a cramp.

Anonymous
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Anonymous

fancyfree — been there for about a year and a half. Moving from a type 2 into a type 3, maybe? My rent for a 1500 sf duplex is less than half the average mortgage cost reported in the Sun. Less than 10% of our gross income. I guess I'd like to own, but it makes no sense. Not sure if it'll ever make sense in this city.

go.east
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go.east

ana b, congratulations on finding a place you like, i couldnt find any place that even approached the comfort of my rental place for even triple my monthly payment. maybe im just overly picky or maybe i just lucked out with my rental situation, either way i wont be looking again in vancouver unless i see news of a crash.

Ana B.
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Ana B.
I was a type 1 last year. I did check out prices for about 2 months and knew I wanted a loft in a particular building. When I finally called a realtor, I found out every single condo I was interested in was sold or had an accepted offer that day. He suggested we went to see another building. So I saw the place (first one I saw outside the web), sort of liked it, thought to myself "if I don't buy this one, I'll never buy anything." Multiple offer scenario, we bid a few thousand above price list and went with a no-subjects contract. Risky, now that I look back. But I lose motivation very quickly. Even when it comes to buying a home. Overall, I'm pretty happy with what I got and would do it again because that's… Read more »
Ana B.
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Ana B.
I was a type 1 last year. I did check out prices for about 2 months and knew I wanted a loft in a particular building. When I finally called a realtor, I found out every single condo I was interested in was sold or had an accepted offer that day. He suggested we went to see another building. So I saw the place (first one I saw outside the web), sort of liked it, thought to myself "if I don't buy this one, I'll never buy anything." Multiple offer scenario, we bid a few thousand above price list and went with a no-subjects contract. Risky, now that I look back. But I lose motivation very quickly. Even when it comes to buying a home. Overall, I'm pretty happy with what I got and would do it again because that's… Read more »
Anonymous
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Anonymous

I thought i was a type one this summer, then i saw what I could afford. no way! The overwhelming urge to buy has left me and ive settled into a new comfortable rental. I must say its nice having someone else responsible for any repairs and major expenses. With my shifted priorities im taking a couple of months of work and going traveling. Ive never felt so relaxed in my life! I guess the searching for a liveable place to buy was more stress than i thought!

Anonymous
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Anonymous

Love the illustrations!MeadowHard Core Type Two, Sticking to Guns for Another Five Years

jasmine
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jasmine

I guess I'm type 3, Ive got a condo in Vancouver and I'm not looking at moving for at least 5 years. I think I may have overpayed a bit, but I got lucky selling my leaky condo in New West, and not having a fifty thousand dollar repair bill hanging over my head is such a relief. As long as people are willing to bid up the price of a known leaky condo this market won't be slowing down anytime soon.

Anonymous
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Anonymous

I think I'm definitely in the type 2 category. I have decided to rent out my current home and increase my savings for a down payment. Where did I move to? I moved the fam to the basement suite in the residence owned by my parents…I'm more than happy to wait this out until there is a SIGNIFICANT price correction. Call it whatever you will but I am not going to jeopardize possible financial ruin by buying in a peaking market with slightly increasing interest rates. Just my 2 bits…

Anonymous
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Anonymous

You type 4's are really type 2. Read it again: a type 2 is willing to buy, but has a price they're waiting for. That's the situation you're in.

ken
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ken

I'm with you on the type 4 – I think that we could fit into the type 2 category, but it's probably more informative to seperate the two. Those that want to buy, but cant (2) and those that can buy but current prices dont make sense for them(4).It there are enough type 4's out there, than thats where the bottom of the market will be set – if the majority have no downpayment and are counting on lax lending standards the market could be in for a nasty shock if the economy takes a dive.

solipsist
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solipsist

I'll go with johnrenter's Type #4.That's me.

johnrenter
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johnrenter

You forgot Type #4More than capable of buying even at today's prices, prudent in their buying process, able to connect the economic dots, immune to RE industry cheerleading, remembers history and is waiting for the correction which as sure as the sun rises is just around the corner, so as not to invest in a depreciating asset.

Anonymous
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Anonymous

Venom? That is the understatememt of the year. I loathe your kind. A good part of the populatuion can't afford to live here at these prices and you parasites could care less. Some of you may pretend to but it's the all-mighty dollar that you truly care about.Make a buck? Try doing an honest days work. Maybe spend some time helping less fortunate people….AT NO CHARGE! Yes, I'm sure that makes most of the bloggers here tremble in disgust.Financially I do ok but some relatives and friends do not. This market is absurd and I have more than just venom for the parasites that fuel this situation. To the people that profit and cause this market I say to you, "From Hell's heart I stab at thee. For Hate's sake I spit my last breath at thee."

fancyfree
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fancyfree

anon 8.24-not to nitpick, but by this criteria you are actually a type 2- Type 3 doesnt bother to check prices.Does anyone else who has been actively looking this summer feel less of an urge to buy as we move into fall? I'm not sure why, maybe its just that I'm not finding a place I want to live in for a price I'm willing to pay, but I'm finding myself more and more happy with my current rental situation.

richard
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richard

I can't speak for anyone else, but I think any animosity you are sensing towards investors is actually aimed at speculators. I think most investors want a return for their investment and are staying away from vancouver real estate right now. Speculators on the other hand, seem to think that maybe, just maybe prices will continue to rise at the rate that they have for the last couple of years.It will be interesting to see what happens to demand when prices start to soften.

Anonymous
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Anonymous

Why so much animosity towards investors? Everybody needs to make money, why do you have so much venom towards investors?

Anonymous
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Anonymous

Type 3 here. I am here to monitor prices and maybe buy when they go down to a reasonable number. It seems most of the people here are investors and fear us; glad to hear it. Personally, I'd like to see all of you greedy types at the bottom of the ocean with the realtors and layers. You people are truly the bane of a normal society.Today's prices are absolutely insane and we're now seeing a correction. Looks like anywhere from 5%-15% is the guesstimate. We can all speculate etc but the best option is to observe what's actually happening. Subtle drops in real estate, fewer sales and increases in the amounts on properties that have gone up for sale.

Anonymous
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Anonymous

Somehow I don't think you're going to get many comments from type 3. If they aren't interested, they aren't going to be reading about real estate.Here's my estimate for September's breakdown:type 1: 10%type 2: 40%type 3: 50%Last May was:type 1: 25%type 2: 40%type 3: 35%Next February will be:type 1: 2%type 2: 60%type 3: 38%