Tips & Tricks Navigating Through Toronto’s Bidding Wars
Very often buyers find themselves competing with other buyers bidding in a multiple offer situation for the same property. We have witnessed this type of negotiation situation over the last couple of years and still today in the current Toronto market.
While sellers love multiple offer situations, the bidding war scenario is enough to have some buyers backing away and not willing to participate. My job is to educate clients on straightforward strategies that offer the best opportunities for success. What’s important here is to realize that you do have options that can empower you with a fighting chance to get the home of your dreams.
The key to the multiple offer situation is to be fully prepared to embark on more critically focused real estate strategies:
- Know exactly what you are getting yourself into.
- Arm yourself with the right information so you can be successful in this process and style of negotiation.
- Prepare yourself mentally and emotionally to be firm about what you have, what you need and what it is you are looking to achieve in any given situation.
Very often property prices are set as teasers and do not necessarily reflect the true market value. It is important to do your due diligence to determine just what the market value is on a property. Typically I will run a CMA (Comparative Market Analysis), to find out what comparable properties have sold in the neighborhood over a specified period of time. For example: just because a house is listed at $599,000 the comparables might in fact be really worth $750, 000 to $800,000. I will not tell you what a property is worth, but will provide the value based on historical data.
Here is what I recommend and do to facilitate the best possible outcome for my buyers:
When you are ready to get into the market for a new home, approach your bank or mortgage agent to get yourself pre-approved so you have the financial parameters of your home search.
When I find you your perfect home, if the seller has not done a pre-home inspection I will advise my clients to have our own property inspector or contractor go in to the property before the offer date. In this way you are empowered with knowledge of the condition of the home. In a multiple offer situation you may have to accept any issues, realizing you will take responsibility for renovations. All houses have their issues big or small: a good home inspector should have a laundry of list of possible imperfections and solutions. A pre-home inspection will help you determine whether you can afford to take on any repairs or not.
On the day of offers I choose to be in constant communication with the Listing Agent/Brokerage to find out how many registered offers there are on the property. My strategies will vary based on the property location and time of year, when it is the best time to register an offer in this process.
It is always important to come to a multiple offer situation with a certified cheque or bank draft for the deposit. A strong deposit affects the strength of the offer. Sellers will realize you are a serious candidate. If there are two offers at the same price or one a little less, it is in the seller’s interest to opt for the offer from the buyer with the certified cheque or bank draft in hand.
I know how important it is to have good working relationships and open, clear communication with other REALTORS®. Having a good understanding of how other REALTORS® work, their tactics and strategies, gives me good insight as to how to work with the Sales Representative and the offer at hand. Some REALTORS® might accept an offer on the first round, others may take multiple rounds. Strategies and outcomes are situational. Also, I know that transactions seem to flow much better when working together for the best and highest outcomes for our clients. Typically I may ask a Selling REALTOR® if there is any general information we should know that might help my clients chances – like the seller’s ideal closing date for example.
Ultimately it does not matter how many other people are involved in a multiple offer situation. Do not concern yourself with competing offers. Understand what you are buying – the value and worth of the property based on the historical data which I have shared with you, and the value to you and your family takes away the fear of entering a multiple offer situation or bidding war. If you don’t try you will never know whether you would have been successful.