In the Toronto condo market playground, do you have to be a bully to win the bid?
With notably low inventory in Toronto’s freehold housing market and the average price up above $1 million in December 2016, more and more people are expected to buy condos in Toronto in 2017. The rise in demand is causing heated fights for available listings that are over almost before they start. As a buyer in Toronto’s condo market, you must be prepared to bully your way to the buyer’s seat or else risk never making it to the table at all.
What is a Bully Bid?
Typically, when a seller puts their property on the market they will set a date that all interested buyers can place an offer in an attempt to control the bidding. A bully bid is when a buyer places an offer on a property before the seller’s designated day for offers. In other words, a bully bid tries to jump the line with an above asking price bid before the seller’s set offer date. The hope is that the seller will take the high, pre-emptive bid because it’s quick and easy compared to dealing with the storm of offers, and it puts an end to the upkeep costs during the showings process.
Whether bully bids are fair is open for debate, but they are happening nevertheless. We have heard many stories from hopeful buyers who struggled to even put together an offer before the condo was sold to someone else, or of listings staying on the market for just two days or less. It’s the Wild West out there and the fastest draw wins.
How to Handle Bully Bids
In today’s market, you will benefit greatly if you’re prepared to act. It all comes down to working closely with your Condo Pro, so that you can both put your plan into motion when the moment strikes.
Bully bids may work for some situations, but it always comes down to what the seller wants. A much stronger strategy is to recognize that your Condo Pro is your teammate and to work together right from the start.
Let your Condo Pro know exactly what you want.
You need to be as specific as possible about what you are looking for. Don’t just say, “I want a two-bedroom condo.” The more exact information your Condo Pro has about what you want, the more they can narrow the search and the faster they will be able to recognize a listing that suits all your needs.
Be aware of your full financial capacity.
More often these days, condos are selling above asking price, so you need to be ready to bring your highest possible offer to the table. At the same time, you never want to max out completely. Teaming with your Condo Pro as well as a financial advisor to create a strong real estate budget will improve your chances because a) your Condo Pro will help you narrow your search towards affordable, realistic condo opportunities, and b) you will be 100% ready to draw your highest offer as soon as you find a place you want.
Ask for weekly market price updates.
Buyers should be keeping track of the market on a weekly, if not daily, basis. Condo Pro Alexia Lewis recommends that buyers stay up-to-date on the price trends of units they like so they know what to expect on similar units in the future. The best way to follow price trends is to ask your Condo Pro for them each time a place you have viewed sells to someone else. Another great way to watch the market is with the Condos.ca PSF Index hosted live on our site every day!
Be ready to sacrifice some of your must haves.
The adage that beggars can’t be choosers is becoming more of a general reality in Toronto’s condo market. While it’s important to know exactly what you want so that you’re not still dreaming when the listing pops up, you should also know which of your must have features you are willing to sacrifice if it means getting an almost perfect place over getting nothing at all.
Your agent is the key to the real estate community.
Working closely with your Condo Pro opens the door to a range of relationships with mortgage brokers, lawyers, appraisers, and listing agents across the GTA. With a network of professional connections, you will have a much smoother time navigating the winding rivers of the real estate world, armed with as much available information as possible to meet the buyer’s concerns.
Sometimes you need to be the bully.
When it comes to buying and selling condos in Toronto and elsewhere, the final decision rests with the seller. The seller can choose to accept any bid, above or below asking price at any time, regardless of any scheduled offer date. Looking at it that way, the system seems set up unfairly against potential buyers. How are you supposed to know what the seller wants? Well, your Condo Pro is here to help you.
Your Condo Pro will know when a bully bid is necessary and they will help you make it happen. Not that a bully bid is a sure deal, but being prepared to make one is a smart idea in today’s market.
Condo Pro Perry Panesar says that being prepared means a) making sure your mortgage status is secured, unless you’re making a cash offer, so there are no conditions on your bid, and b) knowing that you must go above the asking price, often with a cheque in hand so that there is no time lapse in between submitting your offer and the seller accepting.
But remember, a bully bid only works if it’s a firm deal, which means no conditions. A buyer should review the ‘status certificate’, a document that has all the financial info about the building. Typically a seller has this prepared in lieu of the offer night so have a lawyer take a look before making a firm offer. The offer HAS to be firm for a bully bid to win. A seller will not forego the offer date unless it’s a sure thing.
Working as a team with your Condo Pro, you will have a much better chance of buying the condo of your dreams before anyone else grabs it.