The Truth About Bidding Wars
Dealing with multiple offers is a normal part of the real estate market in Toronto.
It's common knowledge that when you're in the market to buy real estate, you will be competing with other offers, allowing the seller to start a bidding war. This can often create apprehension in buyers and investors, as there is doubt that any given offer won't be beat. Here are some important things to know about bidding wars that can increase your chance of coming out on top.
The Seller is in Control
The seller has all of the control in a bidding war, so you should try to be as flexible with their demands as you can. The seller wants to get as much as possible for their property and may even set a selling price below what they expect in order to get a price above asking. Be prepared to offer above asking price for a property if you are really set on purchasing it.
Fewer Conditions Wins
It's common when submitting an offer on a property that the offer is conditional on things like home inspections, financing approval or that the buyer sells their own property. If you find yourself in a bidding war, the more conditions you put on a seller, the less likely they are to accept your offer. They want a clean sale, meaning they want as few conditions as possible. The best way to go into a bidding war is to minimize your conditions. Consider how much you want the property and whether you're willing to risk buying it without an inspection or other precautions.
Have a Deposit Ready
Typically, a deposit cheque is submitted within 24 hours of a seller accepting an offer. In a bidding war, you'll want to come with a deposit in hand, and a hefty one. A high deposit tells the seller that you have the money to close the sale, and that you're serious about buying the property. The deposit should be around five percent of the asking price.
Be Flexible with the Closing Date
The closing date plays a big role in the bidding war process. The seller may want a quick closing, or may need extra time before handing the property over. If you want to win a bidding war, be as flexible as you can with the closing date. But make sure that it also fits into your schedule.