7 Tips to Winning a Bidding War in this Hot Toronto Real Estate Market
Bidding wars are all the rage it seems these days! What is a buyer supposed to do if every house they like has 5+ people putting an offer in on it?
Don’t worry there are some ways you can be ahead of your competition and put your best offer in and get the house of your dreams!
Read on for my 7 tips to winning a bidding war in this HOT real estate market:
1. Have your pre-approval ready. Any home search should first start with getting pre-approved for a mortgage. Submitting an offer without having the need for a financing condition shows the seller you are ready, willing, and able to buy their house.
2. Have your deposit available and either a bank draft or certified cheque ready and made out to the listing company. If you are competing with other potential buyers every little thing you can do to set your offer apart from other offers is advisable. One of the best and easiest ways for you to do this is to have a visual right in front of them ie: your bank draft or certified cheque with the dollar amount written right on it, dated the same day and ready to hand over if they accept your offer! It is very enticing for a seller to be able to choose your offer and change their For Sale Sign to Sold all at the same time, and may just give you that added advantage over other offers. It shows good faith that you are serious about your offer and again, it shows you are ready, willing and able to buy their house right now.
3. Write the perfect offer. The goal in a perfect offer is to make it as clean and easy as possible for the seller. Ensuring that every T is crossed, I is dotted and information is correct is the key to avoid having the seller draft a counter offer. Include only terms that are favorable to the seller and not asking them to do something extra or that they may not want to warrant or guarantee. Unfortunately the onus is on the buyer to make sure they are comfortable with the house the way they see it and to take necessary steps to investigate any questions further. Clean offers win houses.
4. Remove unneeded conditions. I’m sorry to break it to you but conditions do not get you the house in a bidding war. In a more balanced real estate market conditions should be a part of every offer but in a HOT seller’s market they will eliminate you faster than anything! Think about it, if you have a condition and another offer does not which offer will the seller favor? The sure thing or the one the buyer still has some work to do AND can essentially change their mind at a later date and back out of? Don’t be that buyer, don’t waste your time, energy and emotions. It again comes down to making your offer as clean and as favorable as possible for the seller. This may mean, doing your homework BEFORE submitting your offer. Getting a home inspection BEFORE submitting your offer and ensuring your financing is in place BEFORE putting pen to paper.
5. Be flexible on closing date. It’s a seller’s market and they hold all the power when they have more than one buyer fighting it out for their house. Give the seller what they need in terms of their closing date and be flexible if you need to change the one you have in your offer. The seller will take note of your flexibility and that might be the tipping point over a buyer who is much more inflexible. Don’t you want the seller to have the impression you will be reasonable and easy to deal with as closing day approaches?
6. Up the deposit amount. By putting down a larger than normal deposit, you’re signalling your serious and you have the means to do it! Again, you want your offer to stand out from other offers and if you can do it by showing a much larger deposit amount the seller will take notice. They will not worry you can’t close the transaction and will not question your financial readiness. As a side note, know this money does not go to the seller’s pocket at the time of the offer. The deposit is actually held in a trust account until the closing date and essentially reduces the amount of money you put towards your down payment.
7. Raise the offer amount. Okay you knew this was coming. If you’ve put your best offer forward and included all the above steps at the end of the day the most important consideration is always going to be the price. I’m not going to lie. This is not the time to find a bargain and “get a deal”. It’s very hard to do that in a seller’s market with no inventory and as hard as it is to hear, market value goes out the window too. It comes down to what value you place on the property. Is this your long term plan, what will this house represent to you? You must take this all into consideration when deciding what your best offer price will be. If you can comfortably put in your top price and walk away if it sells for $1 more than you have done your best. If, it sells for a price you would have paid now is the time to put that money on the table. A lot of people think they will get a second chance to improve their offer but this is not always the case. Go in strong and beat out your competition so there is no question which is the best and most attractive offer.
In twenty years of selling homes the best advice I can give you is to seriously think about losing the house that you have in front of you to purchase. Hindsight is twenty twenty and if you could’ve put in the price that it sold for and chose not to, you will compare the house you just lost to every other house that comes on the market. With the inventory of houses so low this could take a while and if prices increase you may have missed your window of opportunity.
By doing your homework and following the simple tips I’ve outlined, you’ll win a bidding war in no time and the home of your dreams.
Looking for more great tips and information for buying a house in this market? Schedule your complimentary strategy session with me today. There is no obligation and you will walk away with even more great tips you can put into action today and bring you that closer to the house you really want!
Happy house hunting!