I won't sugarcoat it: being in a bidding war isn't anyone's favourite thing. It's stressful, can take you beyond your budget – and can be a real letdown when someone else lands a property you love. But having the winning offer IS possible: here are my top 5 strategies for submitting a successful bid.
1. Work with a really great REALTOR®.
You may not have been in a bidding war before, but an experienced agent has. A savvy agent will guide you through the process and advise you on the best tactics to use. For one thing, they will be able to determine the actual value of a listing: the amount a property will probably sell for versus the list price.
These days, the dollar amount you see on the listing is often not the price the seller is looking for. Properties are priced well below market value to get the attention of more potential buyers, and if you come in at (or close to) list price, you’re likely to be turned down. It’s your agent’s job to help you figure out if you can afford the actual value – before you take the time to see a property, get your hopes up and put a bunch of effort into an offer.
But that’s not the only thing an agent will help you with: they will also communicate with the listing agent, help you come up with the right offer strategy, and negotiate tirelessly on your behalf.
2. Consider a bully offer.
If sellers are open to a pre-emptive offer (one that’s submitted before the offer date), getting in there before anyone else can be the best strategy.
In a market as competitive as the one we're in right now, listings don’t always make it to offer day. If someone else gets in there first with their bully offer, your opportunity to bid is gone – and so is that property you wanted. If you really love a place – say you've been waiting for a unit in a specific building or you've finally found the house that checks every last one of your boxes – being a little aggressive can get you a property in a market where prospective buyers outnumber available listings in a very big way.
3. Go in firm (no conditions).
If sellers won't accept a preemptive offer (it happens), make it easy for them to say yes on offer day by submitting a bid with no conditions and attaching a bank draft with your deposit. Get pre-approved for financing well in advance, have your lawyer review the condo status certificate and/or the home inspection report: sellers looking for a bidding war will often provide these documents. Zero conditions will help you stand out, even if you don't have the highest bid.
4. Put a human face on your offer.
For some people, selling a home can be a very emotional thing: including a personal letter can help win sellers over. Be authentic: tell them how long you've been looking for a home like theirs, how you plan to raise your family there, how you’ve fallen in love with the view, the backyard, the way they renovated the kitchen. Knowing that the buyer will love the place as much as they did can go a long way to convincing sellers to accept your offer. I've had instances where a great letter won out over a higher bid.
Another strategy is to have your agent present the offer in person. Now that things are more open, this is becoming an option again. And while it’s not your face that’s in front of the sellers, your agent’s ability to “sell” you to the sellers can make a real difference.
5. Put your best foot forward.
The offer amount should strike a balance: if it’s accepted, you won't have buyer's remorse. If it isn’t, you know you gave it your best shot. I've been in situations where my clients offered less than their max, thinking they'd have the chance to improve their offer later, but the seller simply accepted the highest offer and there was no chance to offer more.
Concerned that you might end up bidding way more than you need to? That’s a risk. But an experienced agent can help you figure out the best strategy for your specific situation.
Talk to an expert
Looking for an agent that can help you win a bidding war or help you with a selling strategy that will give you the best return? Talk to a Property.ca agent.