How to Win in a Real Estate Bidding War (multiple offers)
The better the price and the fewer the conditions, the better your chance of winning the home.
There has been a lot of news lately talking about how “hot” the real estate marketing is in Kitchener-Waterloo, with a number of houses going for well over asking. This leaves buyers in a difficult situations with many feeling frustrated after loosing out on their dream home.
In this post, we are going to break down how multiple offers work, and what you can do to improve your chances of winning a bidding war when buying your home.
FAQ: “Will I find out what the other offers were?”
Unfortunately, you do not get to know what the other offers were. The best way to win is come with your best foot forward. Real Estate is no different than any other commodity market, and in a highly competitive situation (like the market we are in now) the sellers are in control. Think about it this way, if you knew what the other offer was, you would just go a hundred dollars or five hundred dollars more and you would win. You would be at an unfair advantage compared to that other buyer, and the sellers would be at a huge disadvantage.
How does a bidding war (multiple offers) situation work?
Typically, the way it works, the listing agent will set a time, let’s say Saturday at 6:00, you along with 5 or 6 other agents, will be asked to present your offers to the seller individually. The sellers look at all 5 or 6 offers and pick one or two that is their favorite to work with.
You really only get one shot, unless in that rare case you get short listed and they ask you to drop a condition. This is why it is crucial to work with a professional who really understands how to handle these situations and the rules associated with how to handle multiple offer situations (for both buyers and sellers).
Here’s an example of why there are specific rules governing “multiple offers”:
Let’s say we are the first offer in on a property and we go in thinking that we’re the only offer. We put our price in with all of our terms. Then there is a second offer that comes in. That second offer has been informed that we already have come in an offer. That 2nd offer is at unfair advantage because they knew there was already a first offer in, so they would likely submit a more competitive offer (higher price, less conditions, etc.). This is where real estate law helps level the playing field, the prospective buyers who submitted the first offer have the opportunity to change anything in their offer to compete.
If you’re interested in the home, here is one of the best ways to increase your odds of winning the bidding war.
The practice recently, has been somewhat of the following; a listing agent of a property will list a home and say “we are not going to look at offers until Monday.” Let’s say it’s Thursday afternoon, you have enough time to get a home inspector to do a home inspection before the Monday showdown. This gives you a competitive advantage over other buyers because when it comes time to submit your offer, you will have removed one of the most common conditions (Home Inspection), which has the potential to kill a deal. Now, there is a risk that you might end up paying for a home inspection but you don’t get the property, but winning your home in a bidding war is all about giving yourself a competitive advantage.
If you want to learn more about winning your home in a bidding war, or anything else about real estate in Kitchener-Waterloo, please contact us at www.knightrealty.ca, or firstname.lastname@example.org.