Buying a Home in a Bidding War Market
When you’re shopping for a home, you may become interested in a property for sale that someone else is also considering. In fact, in our current Seller’s market there are likely several other buyers entertaining the idea of making an offer. In such a competitive situation, what should you do if you really love that home? Obviously, you’ll need to move quickly if they are not holding off offers until a specified Presentation Date. However, due to the current low inventory of homes for sale most Sellers are electing to set a specified date for receiving offers - usually about 1 week after listing the property on the MLS system. Start by making certain the property fits within your price range. The last thing you want is to have an offer accepted and find out it is beyond your budget. That’s why it’s a good idea to get prequalified for financing before you go home shopping. Next, you want to make an offer that is so enticing to the sellers that they’ll put your offer at the top of the pile, if not close to it. So, what makes an offer enticing? Obviously, price is a big factor. You want to go in at a price that’s attractive to the Sellers. Chances are your offer price will need to be above asking. Find out what similar homes in the area recently sold for — what real estate agents call “comparables” — and use those as a guide. We can also determine the range of how much over asking the comparables have recent sold for. This statistical information can guide you on how much over the asking price you need to be in order to have a chance at success. I have found that many homes are currently selling for 10-20% over the asking price - depending on the price range and how many offers are submitted. It’s also important that your offer contains few, if any, issues that may be concerning to the sellers. The ideal offer will feature: • No conditions. • A closing date that’s convenient for the seller. • A deposit amount that shows you’re a serious buyer. • Acceptance of any of the buyer’s “exclusions”. (For example, they want to take the fridge and stove with them.) • Evidence you can get financing. (Many lenders offer a “Mortgage Preapproval Certificate”.) A “no conditions” offer is the most attractive so including a condition on passing a professional home inspection is usually not going to win the competition. So if you really want a home inspection it should be done quickly during the week before the offer presentation date. Unfortunately to give yourself this peace of mind regarding the home’s condition, it will cost you around $400 with no guarantee that you will be the successful bidder. Avoid adding other conditions, such as “subject to financing approval” or “subject to the sale of buyer’s existing property”. You may need to choose a Closing Date that allows enough time to sell your home without it being a condition.
If you want to increase the likelihood that you’ll find — and, more importantly, get — your next dream home, call me today at (905) 978-7653. I would love to help you find and successfully purchase your dream home!