When faced with competition for your dream home, keeping a level head is the only way to win

Bidding wars are standard procedure in many parts of Canada. Facing off against another buyer for your dream property can be stressful, but there’s no reason you have to drain your bank account in order to purchase a home you love. Richard Silver, a Toronto-based REALTOR® and past president of the Toronto Real Estate Board, has been involved in many multiple-offer situations during his 30-year career (on the buyer’s and seller’s side of the transaction). His advice: Make homeownership decisions with your head, not your emotions. Here he shares his tips for how to handle the real estate rumble.

how-to-survive-a-bidding-war
UNDERSTAND MARKET VALUE

No matter the listing price, a home will typically sell for what it’s worth. Silver recommends determining the home’s market value—by consulting a real estate agent or looking up comparable properties on the Canadian Real Estate Association’s Multiple Listings Service (MLS)—and bidding that amount. If the house is listed for $100,000 less than it should be, most of the offers won’t make it past the first round. “If all of the sudden there are 16 offers, then chances are the home was not properly priced and the people who bid low shouldn’t have been there in the first place,” he says.

PUT IN YOUR BEST OFFER

When up against two or three other bids, give your best offer right away, Silver recommends. If you don’t get the house, you can at least feel comfortable knowing that you tried your best. Remember that putting in your best offer doesn’t mean going beyond your budget. Determine  your limit and stick to it.

It’s not just about winning; it’s about getting the right home for you.
NIX YOUR CONDITIONS

Removing conditions from your offer may make your bid more appealing, Silver says. The financing condition is fairly easy to remove, as long as you have completed the mortgage approval process before bidding. You may also want to think about eliminating the home inspection condition. That doesn’t mean forgoing the actual inspection; if you’re really interested in a home, pay to have an inspection before you make an offer, not after.

BRING A CERTIFIED CHEQUE

“If you’re serious about purchasing a home, bring a cheque when you make your offer so that the sellers can deposit the money into their account right away,” Silver says. Giving the sellers money they can cash immediately shows you’re committed to the purchase and it gives them added incentive to accept your offer.

LEAVE EGO OUT OF IT

Problems arise when buyers get carried away with competition and think they have to win the bidding war. Silver says that people shouldn’t stretch beyond their means financially—it’s one thing to bid an extra $2,000 to $5,000 higher than your initial budget, but if you find yourself impulsively extending your limit, it’s time to move on. “It’s not just about winning, it’s about getting the right home for you,” he advises.

BE PREPARED TO WALK AWAY

While it’s good to be optimistic that  your bid will win out, you and your agent need to be ready to move on.  “I say to the client, ‘We’ll put in our  best offer, but realize that there’s a  good chance we’ll be out looking for houses again tomorrow’,” he says. “Don’t feel badly about it.”

Achieve the homeownership dream sooner