Bidding War 101 (and why high bids might be a losing strategy)
Remember that just because one hopeful homebuyer outbids your offer, doesn’t necessarily mean you should volley back. In the worst-case scenario, you might end up with a home you haven’t researched, in a neighbourhood you don’t love, at a price you can’t afford.
In the meantime, here are some strategies to help you make a smart bid and if all goes well, a smart buy.
Know your limit.
As a homebuyer, a mortgage pre-approval is step #1, regardless of market conditions. This step informs you of how much you can spend on a home. It’s your hard limit, should a bidding war ensue. A mortgage pre-approval also guarantees your interest rate for 90 days or more, bringing peace of mind around concerns of short-term rate increases. Ask your lender for a letter - it helps in a multi -offer situation.
Get the comparables.
How much is the home really worth?
Our Buyer Agents will pull recent sales stats for you, offering valuable insight on the price of comparable homes in the same neighbourhood. You’ll then be better equipped to determine how comfortable you are taking on competing bids.
Know what you’re buying.
We all know that premium neighbourhoods come at higher prices. It could be proximity to the downtown core, access to lakefront, parks and recreation, good schools, shopping, or all of the above. Consider what you want and need, and why. Then decide if the home and community you’re considering is worth the price.
One trick to winning a bidding war is to avoid it altogether. Make an offer before the home hits the MLS system or gains buyer attention through an open house. Our agents are plugged in and get advance notice on homes coming to market - put that to work for you!
Meet with us early so we can best advise you on how to proceed, so prepare to drop everything to tour a new listing and make your offer, before someone else does! (Note: Mortgage pre-approval in this scenario is key.)
The spring and fall housing markets see the most real estate action, with buyers out in droves and bidding wars bubbling at the surface. If you’re not in a hurry to buy, minimize your competition and possibly even price by shopping in the “off” season. Winter sees a drop in inventory, but also in demand, reducing your chance of being outbid.
Be smart about your bid.
You did your homework, right? You’ve determined how much you can afford to spend. And you know what the home is worth based on comparables. You also know what the home is worth to you. Make a bid that’s reflective of all of these considerations. Before jumping on the bidding bandwagon, have confidence that you’re getting a good deal.
When all is said and done, remember that the spoils don’t always go to the highest bidder. Make a clean offer, be flexible, and know when to walk away.
The right home isn’t “right” if the cost to you is wrong.