Have you been outbid on offers and are frustrated with buying a home in Toronto’s record breaking market? Here are 7 ways on how to win a property bidding war in Toronto and the GTA.
1. Have a realistic expectation.
The list price may sound enticing at $599,000 when you’ve qualified for a $625,000 mortgage…but will the home really sell for that? If comparable homes are selling for much more, you’ll know that the Seller and his agent priced low in order to generate interest from multiple buyers and drive up the price. Frustrating? Yes, it can be. In some cases the list price doesn’t mean anything. What is the home really worth as compared to other similar recent sales in the neighbourhood? If you know that they’re selling for considerably more than what the price is listed at and it’s beyond your means, move on to something else.
2. Give yourself a healthy buffer amount to move up in price.
The list price doesn’t mean anything (well, sometimes). What is the value to YOU? This ties into having a realistic expectation about the property. At the end of the day the value is what a Buyer is willing to pay. There will always be someone else who might feel it’s valued at more (or less). Give it your best, but do leave a bit of room to move up in price. Some Sellers will decide on the offer they’ll work with based on the first shot so you don’t want to lose an opportunity however, if there are other similar offers to yours the Seller might provide for a second chance – so having that buffer could mean getting the place in the end.
3. Fulfill conditional obligations before offering on the property.
Let’s face it, in Toronto’s heated real estate market if you have any conditions in the offer you are dead in the water. A Seller won’t take a chance with the sale falling through if for some reason the Buyer doesn’t receive financing approval, or wants to walk away because of findings in a home inspection report. This means possibly turning down a more attractive offer price for a FIRM sale. Once a firm offer has been accepted the parties are bound to that agreement and may not “walk away” for any reason. Btw, a smart Seller and his Realtor will have already had a home inspection completed prior to listing and the pre-listing home inspection report available for review. Ask to see it and if you feel that it’s not comprehensive or detailed enough there’s nothing stopping you from having your own home inspector view the property. Sure it’s an out of pocket expense before even knowing if you’ve got the home, but isn’t that $400-500 bucks worth the peace of mind?
4. Think outside the box with your offer price.
Almost everyone will round their numbers in an offer (for example $650,000 on a $600,000 list price) and or move up in increments of $500-$5000. This means that there’s a greater chance of someone else having the same offer amount as you so you will have to subsequently increase your offer in order to differentiate yourself. Why not do so right off the bat? Try a number that’s not predictable. Some cultures find certain numbers lucky so use this to your advantage if the Seller could relate. Also keep in mind that some find certain numbers unlucky, therefore don’t use those unlucky numbers in abundance.
5. Have your deposit funds ready with the offer.
What this tells the Seller is that you mean business! Having the deposit cheque together with the offer at presentation means that you’ve fulfilled this requirement in advance, whereas it’s typically provided within 24 business hours of an accepted offer. Leave those personal cheques at home. The deposit should be a money order or a certified cheque and in an amount that makes sense to the list price. Some would say 4-5% of an offer price is a good deposit, but this will vary based on purchase price and trends in that city. The larger the deposit the more attractive your offer will be to the Seller. Be sure to transfer funds from accounts in advance so it’s easy for you to access. If you bank with PC, for example you may need an extra day turnaround. Always have deposit funds ready and accessible when you’re serious about buying a home.
6. Add a personal touch.
Most Sellers will want to know that their house is going to be lovingly enjoyed by the new owner for years to come. What is in in particular that you love about the property and the deciding factor for your purchase? Are you starting a family and find that this would be a perfect home to raise your children in? Does the home have unique features that you’d like to preserve? If the Seller can relate to you as the Buyer, you’ve already touched upon something that resonates with them which could help in you landing the purchase. It doesn’t hurt to write a letter or advise your Realtor to share some information about you to the Seller in order for them to understand why you’re buying the house.
7. Get a great Realtor and let them help you.
They do this every day, and can help you with the very best strategy. Ask a lot of questions and feel comfortable knowing that you have someone on your side who’s been through (and won) numerous bidding wars for other Buyers, and on the flip-side have also represented Sellers in multiple offers. This way you have the expertise from both ends.
As daunting as it may seem for a Buyer, the home buying process can be an enjoyable and exciting one. Arm yourself with this knowledge and the help from an experienced agent.
Get in touch with us if you’re ready to take the leap into home ownership. We promise to help you navigate the market and get you into a new home in no time!