Ontario’s cottage real estate market is hot right now—there’s no arguing with that. Bidding wars have sent the price of recreational properties soaring. This year, recreational property in Ontario is forecasted to increase by 17 per cent, reaching an average price of $547,207, according to Royal Lepage’s 2021 Recreational Property Survey.
Much of this is due to the COVID-19 pandemic, which has Ontarians fleeing the city to secure a piece of paradise in cottage country. “There’s no question the pandemic has caused an increase in demand,” says Susan Benson, a real estate broker in the Muskoka area. “As long as there’s good internet, people can really work from anywhere.”
But this means cottage owners are also less likely to sell, causing a decrease in supply. This has resulted in heated bidding wars over available properties. Shawn Woof, senior vice president of sales for Sotheby’s International Realty Canada, says the bids on cottage properties have cooled a bit since the start of the latest stay-at-home order, but in the months prior to that, he’d seen as many as 30 bids on a cottage property, nearly 10 times the number you might have seen pre-pandemic. Benson says she’s seen as many as 23 bids and is routinely giving 50 to 60 showings per cottage property.
With so much competition, it can be tough, as a buyer, to make your bid stand out, especially if you’re working with a limited budget. To help, here are some expert tips on how to secure your desired cottage.
Create a connection with a local realtor
The first step when looking at real estate in a particular area is to partner with a local realtor. “Then you’ve got a professional helping you with your research, answering your questions, somebody who knows the lakes, who has a good grasp of the local market,” Benson says.
Without a local realtor, Benson says she’s seen people buy what they think is their dream cottage only to find out about unanticipated waterfront issues come summer, such as ownership of the shore road allowance, significant water level changes, and how weedy the lake is.
Woof agrees, adding that it’s all about connection. “It’s really important to have a great connection with your realtor,” he says. “If your realtor is working with multiple buyers, you want to make sure that you’re top of mind.” To do this, Woof suggests planning in advance by watching the sales cycle and ensuring that the time you have booked to meet with your realtor coincides with when offers are being held. This will show the realtor you’re serious about buying a cottage.
It’s also important for your realtor to be connected to other realtors in the area, Woof says. This means your realtor will have a better sense of when a property might be put up for sale. “I was working with a client last week,” Woof says. “He was very committed to getting into the market, and I was able to show him a handful of properties before they hit the market.”
Submit a buyer introduction letter
Buyers can send the seller an introduction letter, telling a personalized story about their family and what the property would mean to them. “I like to call them love letters,” Woof says. This is because the letter creates an emotional connection with the seller, causing them to see the buyer as more than just a number.
“I’ve even heard of people doing introduction videos,” Woof says. “Ultimately, it’s all about the connection.”
Place a preemptive offer
With bidding wars driving cottage prices well above asking, Benson says that buyers may need to be prepared to make an offer outside of their comfort zone. “We are literally telling our buyers: ‘be prepared to offer an amount of just shy of what will make you throw up’. And if someone else gets it for a dollar more, know that you’ll breathe a huge sigh of relief and move on,” she says. She adds that buyers should also be prepared to put an offer in without any conditions.
But if you want to get a jump on the bidding war, Benson says there is an alternative. You can submit a pre-emptive offer, or, as it’s sometimes called, a bully offer. “We are starting to see more sellers open to an offer that comes in ahead of a published offer date,” Benson says. “At the very least, a buyer should start preparing an offer ahead of the offer date so that they’re ready in the event that somebody else goes in with a bully offer.”
If you are thinking of taking this route, Woof advises asking your realtor to check the realtor’s comments to see if the seller’s open to receiving preemptive offers. If they are, Woof says you’ll have to submit an aggressive offer. “You have to be aggressive if you want to be successful,” he says, “because you won’t have others pushing up the ultimate sale price.”
Widen your scope
The reality of Ontario’s cottage market right now is that you might not win that gem of a cottage you’ve been pining after—at least not without a bidding war. To avoid the competition while respecting your budget, Woof says buyers need to widen their scopes.
Start by looking at properties farther from the city. “The idea of getting in the car Friday afternoon and driving back Sunday has changed. You can be more flexible in your coming and going, which means a traditional drive that would have taken three hours with traffic on a Friday, now you can leave at a time when there’s less traffic, and spend the same amount of time in the car to get to your property,” Woof says.
Non-waterfront properties or properties on rivers are also a cheaper option. “You can leave your boat at the marina and enjoy the water without being on the waterfront,” Woof says.
Benson’s advice for avoiding the competition of a bidding war—although she admits it’s a facetious answer—is to place an offer on an overpriced property. “What we’re finding is that when a seller lists at an appropriate price, emotion will carry the price higher,” she says. “But if you list at where you think that price may land, chances are it won’t sell for that.”