How to Win a Bidding War
Jul 14, 2021 | Buying
THE DO’S AND DON’TS OF COMPETING OFFERS
Bidding wars have made being a home buyer incredibly difficult in 2021. Fewer homes are available for sale leading to more competition between those wanting to purchase. You’ve probably heard stories of houses going for tens of thousands higher than the listing price and 10 or more offers all coming in at the same time for one property. Although the real estate market has cooled slightly in Calgary, bidding wars are still common in certain price points and neighbourhoods
When you are competing with other buyers on the same house you need your offer to stand out. You also have to demonstrate that you are serious about the property and make the sellers feel confident in your intentions. Most people believe that it’s always the highest price that wins a bidding war. But that is not the only factor that sways sellers. Often times it is the offer that has fewer conditions, a short condition period, a possession day that is favourable to the seller and the highest deposit amount that wins.
Avoid the frustration and heartbreak of finding out your offer has been rejected. Improve your chances at winning a bidding war with these tips:
DO Get a Pre-Approval Letter
Ask your financial institution to provide a pre-approval letter showing that you are capable of purchasing. You can ask your mortgage broker or bank for this document and sometimes including it in your offer will make it stand out from the rest.
DO Give a High Deposit
Offer a healthy deposit and have the funds readily available within 24 hours. A good rule of thumb is to offer a deposit of 5%. This shows the sellers good faith and that you are serious, organized, and financial capable.
DO Know the Market Comparables
Know the neighbourhood and comparable properties that have recently sold. Ask your agent for this information and discuss how much you are willing to pay before you write the offer.
DON’T Talk Price
Many sellers have technology installed in their homes or at their front door that can pick up what you are saying when you are viewing the property. Always assume someone is listening. Play your cards close to your chest and keep these conversations off-site.
DO Keep Conditions to Minimum
If your offer to purchase contains conditions that need to be met before the sale is firm, like a home inspection or mortgage approval, keep them to a minimum and do your best to have them met within a week. Your offer will be more attractive to the sellers if it has a shorter time frame to a firm sale.
Don’t Wait fo find a Home Inspector
Decide on who you will hire to complete the inspection before you make an offer. Having this decided in advance will speed along the process and enable you to give a shorter condition period. If you don’t know a home inspector, your agent will be able to provide you with some contacts.
DON’T Include Easy-Out Conditions
Avoid conditions such as the offer is subject to parent approval, review of title or you have to talk to your lawyer. Have this sorted out in advance and put your best foot forward. These kind of conditions signal to the buyer that you may not be seriously invested in the property or that you may try to back out. They will be more likely to select an offer without these kinds of conditions.
DON’T Include Furniture in the offer
Keep it simple. The less complicated your offer, the better. You can always approach the sellers after your offer is accepted to ask if they are interested in selling any of the contents or furniture in the home.
DO Find out How many Offers Are Being Presented
Ask your agent to find out how many offers are being presented. Generally, the more offers that come to the table the higher you will need to go in price.
DO Ask Who Else is Presenting Offers
Find out the names of the other agents who are submitting offers and ask your agent what they know about them. A very experienced agent will usually not enter into a competing offer situation unless their clients are very serious buyers. You can bet that they have prepared their clients to give a very strong offer. Knowing the other agent you are up against can give you a competitive edge.
Do Include a Personal Letter
This is a trend we’ve been seeing more of this year. Include a letter about yourself and why you are right for the house. As corny as it sounds, sometimes this technique can appeal to the seller and make a big difference.
DON’T Sleep On It
Home buyers in 2021 need to be ready to make an immediate decision. The competition is so fierce in some market segments that houses are sold in a matter of hours.