September 22, 2021 | Buying
How To Win A Bidding War In Toronto
If you’ve ever bought a house or know someone who has, then you most certainly know about the dreaded bidding wars that can happen. A bidding war is when multiple people make offers on the same home on offer night, forcing everyone to come back with a higher bid until a winner finally emerges. Stressful right? Of course it is, but we have a strategy designed to win these bidding wars, and help reduce (somewhat) the stress of it all. No matter how you look at it, a bidding war is going to be stressful, but it can be less so, with our winning strategy.
You’ve found the house you want, you put in an offer, you find out 5 other people are also putting in an offer. What can you do?
Before you even get to the offer stage, consider the following steps so you are as prepared as you can be when the time comes.
A clean offer is a good offer
Step 1: Submit a clean offer with no conditions. A clean offer is one with all the financing secured well in advance, the home inspection has been thoroughly reviewed and any questions have been addressed prior to offer day.
More is more. A large deposit sends a large message
Step 2: Present your offer with a large deposit. 5% is the minimum that seller’s in Toronto will want to see, but if you can secure more, do so. A large and immediately available deposit shows financial stability, a serious intent and commitment to closing on the sale. The seller is assured that nothing will fall through and that accepting your offer is a safe bet.
Agree to the seller’s closing terms
Step 3: Agree to the seller’s closing terms. This is one of the easiest negotiation tactics you can employ when trying to win a bidding war. Be amenable. This signals to the seller that you are confident in your offer and ready to move ahead with the close. You wouldn’t want to lose out on your dream home over a few days.
★ For more buyer resources check out:
Be competitive. Make them an offer they can’t refuse
Step 4: Offer a competitive price. The goal is not to overpay, but in a hot sellers market there are no deals to be had. Your agent will be able to advise you on an appropriate offer number based on recent sales in the immediate neighbourhood, but for your own peace of mind, its recommended that you research these sales, to make sure you aren’t over paying. Keep in mind that if you bid too low and lose the house, the next house will sell for even more. As homes sell for record prices, every new home on the market now has a benchmark, and will likely surpass it every time.
Hire the right realtor
Step 5: Ensuring your agent is making connections with the listing agent. Are they pleasant to deal with? Ultimately the seller has the final say in what offer is accepted, but the seller’s agent can also colour that decision. Real estate agents are only human, and sometimes if they find the other agents unpleasant to deal with, they might push for a different offer from another buyer. This comes back to our blog about hiring the right realtor for your sale.
★ Read more about it here: Hiring The Right Realtor
Understand the offer process
Step 6: Have a solid strategy. Ensure the agent has a clear understanding of how the offer will be run. Sometimes, a listing agent will send all offers back for a second round, a decision they have made before the offers have even come in. Other times, they may choose the top offer on the first round. There is a fine balance to be found when making your initial offer. Too high and you might over pay, too low and you might be rejected. Finding that middle ground is where an experienced realtor comes in. Knowing the right amount to offer regardless of a first or second round. These are critical points to understand so you can prepare for offer night.
★ For more content on the different scenarios buyers can face read:
- The Real Estate Debate: Should I Sell Or Buy First?
- Why You Should Take Advantage Of Your Buyer Visits
In the end, if you lose out on the house, dust off and move on to the next one. If one thing can be said for the Toronto real estate market, its that it’s always hot!
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