How do you win a bidding war in this crazy Toronto market? You may be about ready to give up your dream of moving into a bigger house and having the extra space for a home office or children’s play area. After doing offers week after week–and not getting a house–you may start to wonder if things will ever come together. It is more than just a four-leaf clover and a little luck.
We have put together a list of six easy steps to make competing for a house in this frenzied market a little easier;
1. What can you really afford?
Know your numbers and have your budget ready. Big numbers can be scary, and we are often talking in the hundreds of thousands or even millions of dollars, so break it down to something you can digest. What do your monthly payments look like at $800,00 vs $900,000? Look at your budget and consider your monthly costs. Have a budget ready in a format where you can easily change and plug in numbers for any purchase price and know where your monthly payments will land.
2. Don’t get into a bidding war
Sometimes the best way to avoid a bidding war is not to get into one. Try a pre-emptive or bully offer instead. That is basically when you make an offer for the price you would pay in a bidding war but you do it before the offer date. Remember the offer date is the seller’s way of telling the buyers what they would like. The pre-emptive or bully offer is the buyer’s way of telling the seller what they would like. Avoid the offer date and you will often avoid the bidding war.
3. The highest offer doesn’t always win
Reducing your conditions can make your offer more appealing. Even if you are not the highest offer, if you are the cleanest offer with the least conditions, warranties and representations, often you will still get the house.
4. Show me the money
Even if you were making your offer electronically have your deposit ready. The cost of a bank draft is minimal vs losing an offer when the market is increasing so fast. Get the deposit ready so you can send a photo of the draft along with your offer. A personal letter never hurts either. The entire process is up to the seller so appeal to their personal senses and let them know who you are and what you like about their house. You would be surprised how much a personalized letter can mean to a seller.
5. Take the leap
Get clear on what is important to you. The location, neighbourhood, schools, parking, etc. When the right house comes you may know the number you would like to buy it for and the other number which is the most you would pay for it. Lots of times in a bidding war there is only one chance. Think of the process as though each step on an escalator is a house you would buy. Look at that escalator, if you hesitate to get on the step in front of you then you can watch it climb to the top very quickly. If you don’t get on the next step it climbs away from you as well. Soon you cannot see those steps anymore. Make the decision to take the leap for the right house, step on and enjoy the ride. You don’t want to be left behind.
6. Communication counts
Find a great agent, not just a good agent. One thing you cannot substitute for is experience and it counts more now than ever. Find yourself a great agent and together you will find and offer and purchase your new house. Your agent will be able to help you strategize and handle any negotiations and conversations to make sure you really do have every advantage to buy your dream home.
OK a little luck never hurts…It is St Paddy’s day, right?
