So it’s definitely no surprise that bidding wars have become the norm in today’s Toronto real estate market.
As a buyer, you either prepare yourself to get ahead of the game or sink with the rest of the fish on offer night. As much as bidding wars are very frustrating, as a realtor, we also get an adrenaline kick out of it and must say there is no better feeling then winning one of these wars for our clients.
We compiled a list of what to do when trying to win a bidding war in Toronto. Please note, there are no guarantees, even if you follow all these tips:
Photo Credit: martechtoday
1. Research the neighbourhood.
And see what similar homes have sold for and when they sold, pay extra attention to the homes which are very similar and were listed for the same price as the home you are preparing to bidding on because if the home sold over asking, the sellers will expect the same price minimum, if not higher. So make sure your expectations are realistic.
2. Check your budget.
Once you completed tip #1, ask yourself if you’re willing to pay this amount or higher and establish a cut off point where you’re willing to walk away comfortably without regret. At the same time remain a bit flexible especially if your offer is in the running and other offers have been sent home.
3. Get a mortgage pre-approval.
Even though this does not guarantee that the bank or CMHC may think what you paid, is what the home is actually worth and what they’re willing to lend you, it gives you a general scope of affordability and how you look in the banks eyes.
4. Ask for a pre-list home inspection.
If there is a recent one that has been provided by the sellers, then request a copy and go through it in detail, maybe even revisit the home and pay extra attention to the details that caught your eye in the report to gage how bad the problem may be, try even bringing a general contractor.
5. Hire a home inspector before offer night.
If there’s no pre-list home inspection already done by the sellers or if you think it may be bias and you really want the house, then hire a home inspector before offer night.
6. If your agent is prepared so are you.
As a buyer agent we always talk to the selling agent beforehand and try to get as much information about the proceedings, the sellers, the house, etc so we can prepare our buyers. We always call throughout the day to see how many offers are registered and keep our buyers up to date, again to mentally prepare them for the night ahead.
7. Register your offer as close to the cut off time as possible.
This way, your offer is not used as ammunition for the seller’s agent to gain more offers, remember people want what they may not be able to have.
8. Bring a certified cheque or bank draft.
Bring a certified cheque or bank draft to offer night for at least 5% of the purchase price you’re offering, if not higher. The bigger the better as it shows the sellers you’re very serious and the seller’s agent feels more comfortable advising their clients to accept your offer rather then worrying about chasing after the deposit the next day.
9. Show the seller you are a serious buyer.
As a buyer and buyer agent, show up to the offer presentation, again it shows the sellers how serious you are and that you want to strike a deal tonight! Try to avoid emailing offers unless the sellers are being very insistent, always request a presentation.
By being there, you can observe the type of people that are bidding on the house and how long the seller’s agent is holding the other buyer agents hostage. The quicker, one comes out, the worse their offer is, it’s all about observation and reading body language.
10. Come in strong.
Sellers hate when people play games and give low ball offers, it’s insulting! Your first round should be 80%-90% of the price you’re willing to pay. A weak offer may not get a call back for a second or third round, plus if there are a lot of offers to contend with, you want your offer to leave a lasting impression on the sellers.
11. Be flexible with your closing date.
Offer the exact or as close as possible date to what the sellers are looking for, once again, it will make your offer look really favourable.
12. Firm offers are always best.
Meaning no conditions on financing or home inspection, among others. If you feel comfortable doing so, then why not? 9 out of 10 sellers will choose an offer that is firm, even if the price is a bit lower because it guarantees them that the house is sold firm once they sign on the dotted line.
13. Write a hand written note.
Write a hand written note to the sellers expressing how much you like their home and how excited you are for the possibility of living their with your family…..pull on the seller’s heart strings as people make decisions based on emotions all the time and real estate is no different.
14. Never offer whole numbers.
If you’re approaching the last round, never offer whole numbers ie. $445,000, offer numbers such as $445,600 or $446,100, (I think you catch my drift here), to separate yourself from the others, we’ve seen people win bidding wars by $100-$500!
15. Trust your agent.
This is the most important part. If you don’t, then why are you working with them in the first place? This is one of, if not the biggest purchases of your life, by trusting your agent to do the best job possible, gives your agent the confidence booster they need to negotiate the s**t out of the offer and potentially win the war!
Always remember to look at the situation from the sellers perspective, constantly. The selling agent is hopefully doing their best to get their client the BEST terms, price and conditions!
Let us know if these tips help or if you have any of your own, we would love to hear from you!