How to win a bidding war
By Camilla Cornell
If you live in one of Canada’s major cities, bidding wars are a fact of life. “Last spring, one of our clients put in an offer on a property that had seven or eight bids,” says Morgan Dunlop, a sales representative with Real Estate Homeward in Toronto. In the end, the property went for $150,000 over asking. “They didn’t even come back to us to improve our offer — we weren’t even in the realm,” she says.
In hot markets, Dunlop points out, sellers sometimes set unrealistically low list prices to attract buyers. When it comes to making an offer, it’s helpful to have a real estate rep who is familiar with prices in the area. “We try to manage expectations and let our clients know early on that list prices aren’t necessarily indicative of what something’s going to sell for,” she says. But if you happen to be caught up in a bidding war, here are a few things that might increase your chances of success.
Nix the conditions.
“If you’re buying in a sought-after community,” says Dunlop, “rarely does an offer get accepted with a mortgage condition.” Forget stipulating that the sale is dependent on the sale of your current home or your ability to qualify for a mortgage. Anything that could possibly derail the sale is not in the sellers’ interest and they may even be willing to take a lower offer without such conditions.
Dispense with a home inspection.
This is a more controversial tactic because it means accepting the house warts and all. “We would never advise clients to dispense with a home inspection,” says Dunlop. “That’s really their choice to make and it depends on their risk tolerance.” On the plus side, sellers often provide their own home inspection report, she says. If you’ve got a knowledgeable plumber or renovator in the family, you could always bring them along on your house tour to offer reassurance.
Make a bully bid.
A ‘bully bid’ involves submitting a bid on a home before the designated offer day in an attempt to pre-empt other bids and nail down a sale. Even in today’s hot housing market, the strategy sometimes works, says Dunlop. “Some sellers just don’t want to have people in their space, or they really don’t like having to keep things pristine for open houses.” The caveat: if your offer doesn’t compare well with recent sales in the area, you’re unlikely to be successful.
Put a face to your offer.
A personal note aimed at swaying the seller in your favour may work to your advantage — though it could also backfire. “We’ve had sellers who are actually kind of offended,” says Dunlop. Their attitude: “This is my biggest financial investment and I am not going to get emotional about it.” But one couple actually asked for a note and a photo from potential buyers. “Those people tend to think of their home as a special place — maybe they raised a family there — and they don’t want to sell to just anyone,” she says. “It’s worth having that conversation with your sales rep.”