Toronto’s housing market may have slowed down somewhat recently compared to how sizzling hot it’s been over the past few years, but it’s still a relatively hot market today. And bidding wars continue to run rampant in many neighbourhoods in Toronto, getting buyers caught up in a sometimes nasty war between other fierce competitors vying for the same property.
In fact, many buyers find themselves in the midst of a bidding war multiple times before finally landing a home. Such situations can be overwhelming, intimidating, and downright frustrating, especially after winding up empty-handed despite their best efforts.
While there might be little that can be done about the fact that bidding wars continue to take place, buyers can put their best foot forward to boost the odds of coming out on top.
Whether you’re preparing for a bidding war or not, getting pre-approved for a mortgage should always be your first step in the home buying process. How else will you know how much you can actually afford in a home purchase?
But aside from that, being pre-approved will also qualify you for a bidding war and show sellers that you’re a serious contender. It will also help reassure sellers that you’re qualified to afford the home so they don’t waste their time wheeling and dealing with someone who’s just blowing steam.
Plus, getting pre-approved can help get the final mortgage approval process moving along faster if you end up the winning bidder and an offer is reached.
Keep the Offer “Clean”
Real estate offers typically come with various conditions. When an offer is “conditional,” it simply means that certain contingencies need to either be carried out or waived before the deal can go firm. Some of the more common conditions include financing and home inspections.
In these cases, you’d have a certain amount of time to secure a mortgage or have an acceptable home inspection carried out before committing to the home. If you’re unable to get approved for a mortgage or the home inspection reveals major issues with the property, you can back away from the deal and get your deposit check back.
When it comes to bidding wars, however, it helps to keep offers as “clean” as possible, which means not cluttering your offer with too many conditions.
In an ideal situation, the offer would be completely free of conditions, though it’s important to be very careful in these situations. While you may want to avoid most conditions, a financing or home inspection condition are meant to protect you in case something goes wrong.
Go in Armed With a Hefty Deposit Check
In typical real estate transactions, deposit checks are usually required to be submitted to the listing agent’s brokerage within 24 hours after offer acceptance. But in the case of a bidding war, you’ll want to go in armed with a certified check or money order already in hand.
Not only that, but your deposit amount should be pretty beefy. In Toronto, that amount is usually within the 2% to 5% mark, but in the case of a multiple offer situation, more is obviously better. A high deposit amount will show the seller that you’ve got the funds to make the sale happen and are willing to put up more money at risk to land that house.
Be Flexible With the Closing Date
There are tons of terms in a Purchase and Sale Agreement that are up for negotiation. The seller will obviously look at your offer price, but there are other factors that will also play a role in which offer they choose, including the closing date.
Whether the seller wants a quick closing or a long one, try to be as flexible as you can to give them what you want, as long as it fits within your comfort level.
Put Your Best Foot Forward
In typical real estate transactions, there’s often a little back-and-forth bantering that goes on between buyers and sellers. As such, buyers often offer slightly less than their maximum to allow for a little wiggle room to negotiate.
But in the case of a bidding war, second chances are often not awarded, especially if the seller has a number of offers to work with. In many cases, your first offer needs to be your strongest, as there may not be an opportunity to take your offer back to improve it. So offer up your biggest price right out of the gates.
Bidding wars might be a great opportunity for sellers to have their pick of the litter, but they’re no fun for buyers. If you find yourself caught up in the whirlwind of a bidding war, make sure you go in prepared. Strengthening your position right from the get-go is the best way to make sure you’re a formidable opponent and a strong contender for the home you’re fighting hard to win.