Bidding wars and multiple offers are unwelcome words to home buyers. The following strategies will dramatically improve your chances of being the winning offer:   

1. Do your preparation work prior to putting an offer in, 
2. Select the winnable homes to bid on 
3. Make a strong offer. 

The general who wins the battle makes many calculations in his temple before the battle is fought.

Prior to competing in the market, you need to get your financing in order.  Save/borrow/beg for the largest deposit you can put down.  A healthy deposit says to the Seller, that you are financially secure and you are capable of closing on their home.   

Understand the maximum mortgage amount you qualify for.  Next, determine what is the maximum mortgage payment you can comfortably live with.  There is no fun in being mortgage poor.  Don’t put the offer amount in a multiple of $5,000, the majority of buyers do that.  If you want to offer $700,000 then offer $702,000.  Or if you were going to offer $725,000 then offer $727,000.   

Try to have a backup plan on where you can get extra funds in case the home you purchase doesn’t appraise out.  You may qualify to buy the $500,000 condo with a $400,000 mortgage and $100,000 down payment but what if the condo only appraises out at $450,000? You will be expected to come up with that extra $50,000, a total of $150,000 downpayment.   You don’t want to be caught not being able to close.  

Tip: Include a mortgage approval letter, photocopy of the deposit cheque, and your down payment information when you submit the offer. 

In an extremely strong seller market, stop going for the home that is priced low, in a fantastic neighbourhood, and show beautifully. Chances are that home is going to get 20 to 30 offers and go for an insane amount over the list price. Instead, watch for the houses that don’t sell at offer presentations. These homes may seem overpriced but in fact, they have been priced closer to their fair market value, and have a better chance at selling at fair market value or below.  

When a home did not sell on offer presentation, find out if they did get offers but none of them were high enough for the seller to accept. Maybe the seller’s expectation is too high. If the seller needs to sell, then wait a few days and submit an offer.  If the house did not get any offers, perhaps it was listed too high compared to the competition, and buyers all bid on another property. Going in with a strong offer, limited or no conditions, around list price may get you this house at a good price.  

Want more advice for buying your home? Download one of our guides for free right here.

Sometimes buying the ugly duckling can be the wisest choice. 

You don’t want a house that has structural or costly repairs, but an ugly home won’t have as much competition unless it has been priced wickedly low. Look for houses with unattractive coloured brick, loud paint colour, or smelly homes either from smoke or pet odours.  Changing these items is more labour than money intensive. You can usually transform these homes making it not only a great place to live but give you an excellent return on your investment.  

If you have to compete, then here are some things that will help your offer win.  Try to put an offer in ahead of the presentation date referred to as a pre-emptive offer.  Some sellers will look at pre-emptive offers and others won’t but it is worth a try.  Even if you put in a pre-emptive offer, there is a good possibility you will be in competition.  And if you are lucky not to be in competition, the seller will still expect a good offer.  

The critical elements that differentiate offers are price, conditions, and closing date. The highest priced offer will generally win if it has no conditions.  If the highest priced offer has conditions, then an offer that is lower but close in price may win. 

For some sellers, the closing date ranks higher than the price or conditions. If a seller has already purchased a home with a specific closing, they may not want to close before that date to avoid a double move. They may not want a longer closing if they are unable to do bridging or are moving far away.   

TIP: If the seller has bought a new build, consider including a clause allowing them to delay the closing if their occupancy date is delayed. 

Find out ahead of time what are the most important things to the seller and use that information to formulate an offer that will be appealing to them. For example, if the home is an estate sale and the children are well off, busy people that live out of town, money may not be the most important item. They could be overwhelmed with the thought of having to clear out the remaining items in the home, and a quick close may be appealing so they don’t have to continue maintaining the property.  Offering a 30-day closing and including a clause in the offer that the seller can leave any items they don’t want to take could be extremely appealing in this case. Even when money is the most important factor, a clause like this may get you the opportunity to have a 2nd shot if you aren’t the highest offer initially.

---

Find out even more valuable information about how to buy a house in some of our other posts:

• Types of Offers and What They Mean
• Could Buying During A Recession Be A Genius Investment?
• Is it Time to Leave the Guelph Rental Market Behind?
  

  ---

No Conditions doesn’t have to be risky business.

If you are competing in multiple offers, there is a high probability that the winning offer will not have conditions. Sellers prefer no conditions because they don’t have to wait days to see if their home is sold. An offer with conditions ties up their home and gives the buyers an opportunity to walk away.  In the meantime, the other buyers that bid on their property may have found something else, or have talked themselves out of the home. It’s unfortunate, but including any conditions in your offer in this market will drastically reduce the chance of your offer being accepted. 

Avoid putting in a financial condition by doing your preparation ahead of time and have a backup plan if the home doesn’t appraise out.  

Try to do a pre-home inspection.  If a property is hot and getting lots of showings it is unlikely the seller is going to allow you to do a 2 or 3 hours home inspection prior to the offer presentation.  The seller may agree to let you do an inspection but may insist it is an hour or 1/2 hour in duration. Focus the home inspection on the following high ticket items:  

1.       Home’s foundation structure
2.       Roof & attic – shingles, structure, mould
3.       Any signs of water damage
4.       Electric – look for knob & tube, aluminum, fuses, overloaded panel
5.       Plumbing is there cast iron, galvanized or Kitec
6.       Furnace life expectancy
7. Windows life expectancy

This is the best way to protect your interests while still being able to make a competitive offer

If the offers are close it can be the little things that make a difference.

You may have often heard people say that a letter from them to the seller has won the offer.  Sometimes the Seller’s realtor will mention to the buyer’s realtor that the letter made a big difference but the vast majority of the time the better offer won, whether it was the highest, least conditions and/or the best terms. Sure, the seller may have liked the letter and will be really happy that the buyers won but the letter usually wasn’t the deciding factor. I am not saying don’t do one, definitely do. It may get you a call from the listings agent to improve your offer if you aren’t the best one. These are the things to put in a letter, and the things to leave out.  

Put in the letter:

1.     Your financial stability – ie if you work in a secure profession such as medical, law, teacher, etc.  Other professions are better not to mention if they are a profession that is more challenging to qualify for a mortgage. If you work in one of these professions during the covid pandemic, you may not want to include it in your letter:  gym, restaurant, event planning or self-employed.   
2.     If you have been pre-approved, include the pre-approval letter. Also, include your down payment amount if it is greater than 20%.
3.     Homeowners like to hear the nice things you loved about their home. This tells the seller you really like their home and are going to close on it. 
4.   Mention anything you find out that you have in common with the owners,  i.e. the same profession, you know the same people or you own the same breed of dog.  Anything that makes a connection. 
5. If you have a cute photo of yourself/family it can sometimes make an emotional impression on the sellers. But make sure it is a nice wholesome picture otherwise it could do more harm than good.  

Leave out of the letter

1.     The things you dislike about their house will only annoy the Seller. 
2.     If it was the seller’s primary home, they won’t be keen on hearing you are planning on renting it. 
3.     Don’t mention your financial situation is unstable. 
4.     If you have no experience in buying a home that is like theirs.  For example, an older house, a  condo or a rural home.  This is a red flag to the seller that you could get cold feet, especially if there are conditions.  

Persevere, do all the above, don’t get discouraged and you eventually own a home. GoWylde Real Estate is here to facilitate your search for a home. 

Contact us today at info@gowylde.ca or call 519-826-7109 with any questions you have.