You don’t need a real estate agent to tell you that the Ontario real estate market is extremely hot right now. And with the market being so hot you should expect numerous offers and even bidding wars on almost every available property. Prospective buyers and sellers face a far too common situation, many offers for only one property. The seller has the advantage in these scenarios, as they get to review all of the available offers and choose the best one for their situation. A major downside for buyers in this type of situation is that they don’t get a chance to make a counter offer, their original offer is taken as final and best. If you have faced this scenario before, and have lost to a higher bid, or to an offer with no restrictions you are probably frustrated and left with the one question everyone wants to know the answer to: how do you win a bidding war?
To help answer this question, we asked our team of real estate agents in Barrie to share with us their top tip on winning a bidding war. Below are the most common tips they shred.
Know Your Budget Limits
First and foremost, you need to have a solid budget in place. Many buyers have a like to spend budget and a top end budget, in case they find the perfect home that is slightly higher than their like to spend budget. When looking at potential homes, go in expecting at minimum the full asking price to be reached and expect it to possibly sell above asking. If you are looking at homes that all come in just under your maximum budget, you may be setting yourself up for disappointment. Look for properties that are closer to your budget, that way if there is a bidding war, you have some room to move your offer up.
Show Your Pre-Approval
Sometimes having your pre-approval can help you win a bidding war. This can let your seller know you are serious about your intentions. And since every seller wants to benefit from the smoothest real estate experience, showing the pre-approval provides the seller with the peace of mind that financing will not fall through.
Consider Increasing Your Down Payment
Many sellers look forward to a higher down payment. It means you are serious about this commitment. But, at the same time, it may help you win the home you want. A higher down payment ultimately implies that you will rely less on the money from the bank, which is great if a bidding war pushes the price continuously upward.
Pay in Full
If it’s possible, it might be a good idea to pay in full. Of course, this doesn’t apply to everyone, but if you have the available funds to cover the cost of the property, it might help you win a bidding war. It will show the seller that you are serious about buying that property, while also diminishing the risks associated with financing approvals.
Think About an Escalation Clause
Another thing you can do to win a real estate bidding war is to include an escalation clause. It is a great asset for you because it represents an addendum to your offer. It reveals that you’re willing to go up by X amount if another prospective buyer matches our offer.
There are numerous ways in which you can win a bidding war, our professional advice is to discuss an approach with your real estate agent. They are the experts in this scenario and will be better suited to assess the situation and suggest the best course of action to help you get your ideal property.
