Many would-be homeowners lose their dream properties due to savage bidding wars. bidding wars may offer sellers a great chance to have their pick, but they are no fun for buyers; think frustration, stress, and the possibility of paying more for a property than it is worth! If you are planning to buy this year, you will inevitably face multiple offers when bidding on Toronto condos. Here are my top tips for coming out of a bidding war victorious.
Reduce Your Offer Conditions
Real estate offers are usually accompanied by various conditions, meaning that certain contingencies need to either be carried out or waived before you can sign the deal. However, if you want the seller to say yes on offer day, you need to go in firm. This means submitting a clean bid with few or no conditions. So, make sure you are pre-approved through a bank or a mortgage broker, and have completed your home inspection before the offer to show that you are a serious contender, while also protecting yourself. Doing your due diligence reassures the seller that you’re qualified to afford the home and won’t change your morning the next morning. An offer without conditions is exactly what is needed to win in a savage bidding war.
Forget About the Asking Price
If you want to compete in a bidding war, you need to ignore the arbitrary asking price on the MLS listing. In reality, the worth of a property isn’t defined by how much the seller wants to get or how much the realtor thinks the property is worth; it all boils down to how much someone is willing to pay for it. Don’t be too tempted by the asking price and if you think you cannot afford to pay a penny over the asking price, don’t get caught up in the emotion of a bidding war and end up overrunning your budget. Have a budget and stick to it at all costs.
Consider A Bully Offer
If the seller allows you to submit an offer before the offer date, getting in there before anyone else can give you a competitive edge in the bidding war. You don’t want someone else to go in with a solid pre-emptive offer before you and sweep the property off before you ever get a chance. If you have your eyes set on a property, putting in a tempting bully offer might be your best bet in securing the place of your dreams.
Have a Deposit Check Ready
While you are given 24 hours to submit a deposit check after offer acceptance, it works in your favor when you go to a bidding war armed with a certified check or money order. Having the down payment deposit in hand shows the sellers that you mean business and are financially able to buy the house. While the deposit range equals 2%-5% of the purchase price in Toronto market, the more the better when you are in the midst of a bid war. In a predominantly seller’s market such as Toronto, it is not uncommon to see buyers putting down deposits of 10% and even much higher.
Think Twice Before Putting in an Offer
If you are wondering how high you should go on an offer, think like this: Your offer shouldn’t leave you with a buyer's remorse if it is accepted, and also shouldn’t leave you wondering why you didn’t put your best foot forward if it gets rejected. On one hand, you shouldn’t get caught up in the heat of the moment and overrun your budget in order to win. On the other, you shouldn’t offer less than what you can afford, thinking that you can increase your offer later. Remember that there may not be a later; there aren’t the usual back and forth negotiations in a hot market. As a rule of thumb, go in with your best and highest price in a multiple bid situation. In this case, if you win, you will get the house of your dreams, but if you lose, at least you won’t end up overpaying for a property. Also, don’t get emotionally attached to a home prior to a firm deal since it can impair your judgement.
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