Realtors share the bad 'tips' they've heard over the years, and why mom or dad may not always know best
Scraping together a down payment can be a monumental task, even in the best of markets. So considering the cost of GTA real estate these days, it’s understandable why so many homebuyers are feeling squeezed at every turn. That’s why some are turning to mom and dad for financial help. But that also means they have to listen to their parents give a ton of real estate ‘advice’ in the process.
Strata.ca realtors say it’s more common these days to see parents tagging along on their clients’ property showings. There are times though when mom and dad don’t actually know best. Here, two of our top agents share some of the worst real estate tips they’ve heard from well-meaning parents this past year.
Sam Massoudi, an agent at Strata.ca, had a client who missed out on a condo he absolutely loved because his parents simply thought the unit was ‘not in good shape’. In fact, the unit was fairly new and built by one of the best developers in Toronto. Only thing was the place had been rented out to a tenant who left a lot of scuff marks on the walls.
“I tried explaining to my client and his parents that they must see through that,” says Massoudi. “It was a small one-bedroom so painting wouldn’t cost much, especially if it meant securing a place that checked all the boxes.”
But due to parental pressure, his client ended up sacrificing that unit. And their search went on for two more months until they found another condo.
“Sure, he saved $1,500 on painting, but the market was up by another 2 per cent by this time,” according to Massoudi, who adds that this resulted in them paying an extra $11,000 overall.
Some parents will tell their home-hunting children to repeatedly put in what are known as ‘low-ball’ offers, until someone finally accepts their ridiculously cheap bid. After all, who doesn’t want to save money?
For those unfamiliar — low-balling is a technique used by homebuyers to purchase a property for much less than fair market value for the property, and well below the seller’s asking price. Oftentimes, the strategy ends up backfiring and the buyer walks away having deeply offended the seller. Understandably, the seller doesn’t often want to entertain any subsequent offers from the same buyer, as they’re perceived to be acting in bad faith.
"Parents who tell their kids to use this strategy are not understanding how competitive this market is,” says Strata.ca realtor Jenelle Tremblett, who notes there are buyers who will gladly pay top dollar for a property in the GTA. “Follow the lead of your realtor as they know the pulse of competition, and can properly advise if low-balling is even worth your time.”
The reality is that most sellers would first opt for a smaller price reduction and see how the market responds, before outright accepting a dramatically lower offer price.
Your first home doesn’t have to be the place you retire in. But many parents will pressure their adult children to find their ‘forever’ home to avoid the annoyances of moving again.
“But the problem with this advice is that it’s not even realistic in places like the GTA where property values are already so expensive,” according to Massoudi.
This is why many agents advise first-time homebuyers to begin in a modest home they can comfortably afford. Over the next several years, you can gather some equity before moving on to another property that suits your next life stage.
The sole purpose of the listing agent is to represent the best interests of the seller. But according to Tremblett, we hear parents tell their children to use that same realtor as a way to save money.
This piece of advice though just doesn’t add up. In real estate transactions, it’s the seller’s obligation to pay the commissions for both their agent and the buyer’s. So if you’re not the one paying, why not get your own realtor? As well, the listing agent’s interest is to squeeze as much money out of the buyer as possible, in an effort to represent the seller well and earn repeat business down the road.
“The seller’s agent represents the seller, so they don’t owe you anything in the negotiations,” Tremblett explains. “Everyone deserves their own representation, which is why you need to get someone in your corner if you don’t want to overpay.”
Let’s face it – there are some instances where parents don’t actually know best. And when it comes to real estate, let’s not forget many of them bought their first home some 30 years ago during a completely different economy.
But it’s not uncommon for parents to still want to be involved in every step of their child’s homebuying journey because they want to protect their kids. And as Sam Massoudi puts it, “Some parents are also co-signing on these mortgages, so they may feel they have final say.“
Even though parents may have bought and sold a home back in the day, “the truth is many of them remain disconnected from today’s market and how things work,” Massoudi adds.
Tremblett agrees, and hopes parents will begin to realize that today’s housing landscape is quite different from the 80s and 90s.