The Canadian housing market has been moving at a fast pace for some time now which has led to a seller’s market in many areas across the country. When supply outweighs demand, prices often rise and buyers can find themselves in multiple offer situations, otherwise known as bidding wars. A professional real estate agent will help guide and advise you through the process, but doing some preparation in advance is essential. Here are 6 basic tips to help you prepare for a bidding war:
1. Pre-Approval
Getting pre-approved for a mortgage is really the most important step in the purchasing process, especially if you get into a bidding war situation. It lets you know exactly how much you can afford and how high you can go in your offer. Make sure that you have your mortgage preapproval in order before you submit any offers and it will allow you to submit with ease of mind.
2. Submit the Best Offer You Can
In a bidding war situation the most important thing to remember is that there are many variables to take into consideration – a seller may not simply accept the offer with the highest price. The seller will have multiple offers to choose from and they will often accept the offer with the least amount of liability on them. There are many variables to take into consideration, including whether your offer is conditional on financing or mortgage approval, the attractiveness of your closing dates, the amount of deposit you are willing to put down, etc. An offer with no conditions and pre-approved financing is going to be at the top of the pile for consideration.
3. Research
Research is absolutely critical when purchasing a property. Buying a home is often the most expensive financial decision of our lives so we need to make sure that it is right. In a sellers’ market, it’s important to spend time researching your most desired neighbourhoods in depth well in advance. You should be familiar with all the details that would matter to you, be they schools , transportation, amenities, community demographics, so that in a bidding war situation, you are able to make an offer with confidence that you are choosing a home and community that is right for you.
4. Pick the Right Agent
Picking a real estate professional that is going to assist you is always the most critical decision. You want some that is going to listen to you, have your best interests in mind and know when to back out. Keep these tips in mind, but you are not the one that needs to win the war. An agent’s role is to conduct research and advise you of how to be successful, but they should never encourage you to spend more than what you are comfortable. Make sure that if you always trust your agent and if you don’t, look for a new agent.
5. Go the Extra Mile
Not only is purchasing a home one of the most expensive financial decisions of our lives it is also a very emotional decision. Purchasers picture themselves making memories in the new home and sellers already have memories that they often don’t want to let go of. Because of this it is a great idea to include a letter in your offer to purchase. The letter should be heartfelt and let the buyer know who you are and why you want to purchase the property. This can result in a seller accepting an offer that may not financially be the best that they received, but they feel a strong connection to the new purchaser and know that their old home was appreciated.
6. Take a Walk
One of the most important tips when handling a bidding war is to know when to walk away from the situation. Remember that your mortgage, utilities and property taxes and other debts, or what is referred to as your debt-to-income ratio, should not exceed 30 percent. Real estate can be a great investment, but make sure not to overextend yourself. You want to see a return on your investment and build equity as quickly as possible so that you can make and enjoy lots of memories in your home.
Have you been in a bidding war? Share your tips with us.
