This week my team and I participated in three bidding war situations. In the first scenario we represented the buyer and were up against nine other offers. We were fortunate in that although our client did not have the best offer in terms of price we had a “clean," non-conditional offer.
In this instance, our buyer had arranged for a home inspection to be done before submitting the offer.
In the second scenario, we represented the buyer and were up against two other offers. Although we submitted a non-conditional offer we were not successful as one of the other offers came in with a much higher price.
In the third instance, we represented the owner of two properties that were available for lease.
We received two offers on one of the properties and the result was that we were able to secure a leased price in excess of the listing price. The other good news for this owner was that the second buyer decided to lease the other property that was available. In the end -- a win/win situation for everyone!
Bidding wars are a reality, particularly in a hot real estate market as we are seeing now.
Winning a bidding war is a lot like gambling -- the stakes are high and you need a bit of luck to win! However, there are a number of ways you can prepare yourself before entering the bidding war process:
- Get mortgage pre-approval -- know how much you can afford to pay for a home. Arrange to put down the largest deposit you can as this will show a seller that you are serious about purchasing their home and are acting in good faith.
- In general, a “clean” offer will win over a conditional offer in a bidding process. For example, don’t make your offer conditional upon the sale of your current home. Additionally, you may consider doing a home inspection before submitting your offer.
- Know the fair market value of the home you are interested in. This is where an experienced Realtor will be invaluable to you. They will prepare a comparative market analysis for you so that you can submit an offer with a price that is realistic.
- Remember, in a multiple offer situation homes go for in excess of the asking price. You must feel confident that you are not over-extending yourself to purchase the home. On the other side of the coin, if you do not win in the bidding process you must feel comfortable that you submitted an offer with the highest price you were willing to pay
