To call this spring market competitive would be a huge understatement. A continued lack of inventory mixed with low interest rates have been causing eager buyers to chomp at the bit on every well priced home on the market! Houses are selling quick and for well over market value, leaving many buyers exhausted and feeling like they’ll never catch a break. If you are one of the unfortunate buyers who have found yourself on the losing end of the bidding wars, this blog post is for you! Someone is always winning in these wars, and if you set yourself up to WIN, then that someone could be YOU!
House Hunting is a FULL-TIME Job!
If you are set up on an auto-feed from your Realtor® and only browsing the internet for listings every few days, you are setting yourself up to fail. Though many listings are holding back offers until a certain date and time allowing for you to be a little more relaxed with your approach, many good listings are selling within hours on the market and you need to ensure you are not missing out on both! In addition to actively looking, those around you should know you are as well! Don’t be afraid to inform your boss that you are currently looking for a new home and may have to step out for an extended lunch or leave a bit early one day in order to beat the market rush!
Don’t be fooled by the asking price!
Many properties these days are listed slightly lower than market value in order to drum up more interest! This pricing strategy can often make Buyers feel like they are paying WELL over asking price, when in reality they may be closer to market value than expected. This is where your Realtor® can help guide you to the right price. In a bidding war it is expected that you will pay over asking price, but it is also important not to pay over your comfort level or way too much over the true value of the home.
Understand your Limits!
It is easy to allow our emotions to get the better of us when entering into a bidding war. We fall in love with a house and are willing to pay whatever we have to in order to call it home. However, before you begin searching you should have already spoken with a Mortgage Broker in order to understand what you can and can not afford! With that said, it is also important to adjust your expectations based on this financial limit. If you can only afford up to $600k, looking at a house that is $600k and going into a bidding war will not set you up for success. In these cases, it would be best to look at houses listed at $550 to allow yourself some wiggle room during the bidding war process!
Submit an unconditional offer WITH a Deposit Cheque!
If you are given enough time between when you view the property and the offer date, there are some steps that you can take to help submit a strong offer. In this market, money is not the only factor. A Seller will likely choose an unconditional offer of a lower amount, over a conditional offer that is slightly higher. In order to submit this unconditional offer there are three important items;
- Home Inspection – Depending on the age of the home, you may choose to wave this condition but it is always recommended that a proper home inspection is done so that you don’t run into any problems and regrets later. Doing the inspection ensures you can go into the bidding war without this condition and with confidence.
- Financing – Though you have already secured a pre-approval, it never hurts to keep your mortgage broker on your side! Inform them of every property you are interested in placing an offer on and the price you feel comfortable spending on it. Sometimes, though you are already pre-approved, the house may not qualify especially at overly inflated prices. Going in without any financing conditions can be a make or break in a bidding war situation!
- Deposit – Nothing says ‘I’m serious’ like showing up with the certified cheque or bank draft deposit in hand! Be sure to have immediate access to about 5% of the offer price to provide as a deposit… RRSP’s and other investment funds may not be able to produce this for you immediately so have these funds in a savings or chequing account ready to go!
Don’t be afraid to be a bully!
The early bird gets the worm! This can also stand true for bidding wars, but it has to be done correctly. Some sellers may choose not to entertain any bully offers and hold firm to their offer date, but if you don’t ask you’ll never know. Bully offers however, require being substantially over asking price in order to make it worth it for the Seller to take the risk of accepting it before seeing what others may have to offer. Ask your Realtor® if they think it is worth it to try a bully offer, and don’t ever be afraid to try!
Appeal to their emotions
In this crazy whirlwind, we often forget that people are well, people. Living, breathing, emotionally driven people. Are you expecting your first child? Did you grow up in the neighbourhood? Don’t be afraid to add some personality and personal touches to an otherwise cold negotiation. Include a picture of your beautiful family, a letter explaining why this house is the one. Don’t be afraid to pull at the heart strings, you’d be surprised how the small things can have a huge impact.
If after you do all these things to set yourself up for success and you still happen to lose (usually due to price), then throw yourself a quick pity party and move on. You’ve done the absolute best you can and that perfect house is out there, just waiting for you to call it home!