Deposits, Well Over Asking Price
Living room with television mounted on wall in front of a comfy couch


Dear David,
We just signed the agreement to buy our new home. Should we pay the deposit by certified cheque or bank draft? – Ready to Roll

Dear Ready,

In a seller’s market, when buyers are doing everything they can to set their offer apart from the competition, a certified deposit can sometimes give your offer a leg up. A certified cheque or bank draft signals that as a buyer, you are serious about the purchase and have the necessary funds. It also eliminates concern as to whether or not these funds will clear when deposited into the Listing Brokerage’s trust fund. A personal cheque does not indicate that you are any less qualified, but a certified deposit tends to hold a little more weight in the eyes of a seller.

In my experience, a bank draft is just as good as a certified cheque and can be less expensive to obtain. If you are placing numerous offers (as tends to happen in a competitive market), talk to your bank about whether you can get your deposits certified at a better rate.

Dear David,
We just lost out on a house that ended up selling for $188,000 over asking price. How do we compete with crazy offers coming in from the GTA? – Over our Heads

Dear Over,

How do you compete? You don’t.

“Trophy Offers”, as I’ve heard them called recently, are upending our local real estate market this spring. But no matter what the market is doing, my advice is always to pay fair value, not “pay anything to win” when buying your home.

Some neighbourhoods in our region are particularly susceptible to inflated offers coming from buyers in the GTA and elsewhere. Recently, a 1400 square foot semi-detached caught my eye when it received an offer suggesting that its value had increased by over 88 percent in 10 months. The selling price was obviously ridiculous and the neighbourhood didn’t support the numbers. This indicated to me that the (Toronto-area) buyer’s agent may well have been inexperienced and failed to protect the buyer’s best interests. The sellers won big, but I hope their agent advised them not to spend the money just yet — if the buyers come to their senses, the sale might not close.

Some folks justify the trophy offer phenomenon by arguing that if you plan to be in your home for the next 10 years, the market will catch up. My philosophy remains the same in any market: invest wisely, because life can change. Even if you are planning to stay in your home over the long haul, I always think about your exit strategy (just in case) and will counsel you to invest wisely.

Home values in our region are increasing, but not every property gets a trophy offer. Wait for one that doesn’t. You’ll pay a fair price and be better off in the long run.