How good it is to finally find a property that feels like home! And how equally off-putting to realise that there is more than one taker for it. House bidding war are nobody’s ideal scenario, but guess what? They’re a reality. Pitying up against umpteen other buyers, hoping, praying and wishing to get the keys to yourself is nobody’s first choice. Think of all the times you have felt bottled up and seen that property slipping away from your hands. For most people, the immediate and only trump card here would be to quote a higher price. Dent your budget, push your limits, and quote a higher price! What else can one do? What if, we say, not anymore? What if you can get hold of your favourite property without overpaying? What if we tell you there are more ways than one to win that lethal bidding war?
In this blog, we look at 10 expert-backed strategies and house bidding tips that can help you improve your bids, gain an edge over your competitors and make that property your own.
What Causes A Bidding War?
Let’s understand how it works before overpowering the real estate bidding war. The basic logic behind a bidding contest is nothing but high demand. A property has too many takers; everyone just can’t have it. This situation is called a seller’s market, where the demand is high and the supply is low. The seller has the upper hand, while the buyers are forced to compete. House bidding war generally begin with interested buyers submitting their initial offers. If several offers are received, the seller or their real estate agent informs the potential buyers that they are in a bidding war. Buyers now start strategising.
If you ever find yourself in a situation like this, here’s what you can do to ensure that the seller ultimately chooses to hand over the keys to you.
Top 10 Strategies to Win a House Bidding War
The strategy to win a house bidding war is to offer the highest price and grab the seller’s attention in the best possible way. Here are multiple ways to do it:
Get Pre-Approved Mortage
When selling a property, a seller looks for more than just money. They also look for reliability. A pre-approved mortgage tells the seller that this buyer is ready to buy your property and is credible and trusted by lenders. This raises your chances of impressing the seller and eventually getting chosen over others.
Quick tip: When choosing a pre-approved mortgage, choose an established lender rather than newer, lesser-known companies.
Gauge What the Seller Wants
Different sellers have different reasons for doing away with a property. Some might need quick money. Others might want to ensure that the property is given to someone who would take care of it even after they are gone. An easy way to gauge the seller’s motivations is to converse with them. Go beyond formal phone calls, learn about their circumstances, and find out what appeals to them the most. This increases your chances of winning the house bidding war and helps form a personal connection with the seller.
Stay Flexible
Buyers who feel flexible and open to negotiation are more likely to be approached by the seller. If you seem like someone who can adjust their timelines, accommodate the seller’s needs and reconsider, you might win without even making the highest bid. Remember, a simple ‘Hey, whatever works best for the both of us’ can be just as attractive as a hefty price tag.
Buying the House Without Any Changes
This move is a balancing act of sorts. You offer to buy the house as it is, giving up home inspections, surveys, and other things if need be. At best, this shows a keen interest in the property and a willingness to close the deal as fast as possible. However, it is a slightly risky move to win real estate bidding wars. We recommend proceeding with it after consulting someone with strong experience in home maintenance and related fields.
Include an Escalation Clause
Adding an escalation clause to your offer is a smart way to tilt a house bidding war in your favour. The clause automatically increases your bid by a set amount over competing offers up to a maximum limit. It shows the seller you are willing to fight for the house, but smartly. It’s a strategic way to stay competitive without blowing your budget immediately.
Offer to Pay the Full Amount in Cash
Sellers often prefer cash over mortgage. They love the security of a cash offer, which means a quicker, smoother closing process. Anyone offering to buy fully in cash will most likely seal the deal. Buyers uncomfortable with buying in cash all at once can opt for delayed financing. This method allows you to buy a property using the existing money and secure a cash-out mortgage a few months later. You will recover your money, except the closing cost, and continue making regular mortgage payments.
Make a Down Payment
A unique way to win a real estate bidding war is to make a generous down payment. If you have the resources to pay a certain portion of the total price in advance, go ahead and book that home in your name.
Work with an Experienced Real Estate Agent
An experienced realtor knows when to push a deal, back off, and walk away. Their contacts and market knowledge can help them win house bidding war. The ideal situation would be to find an agent you personally know. Otherwise, try looking for someone who has developed a reputation for winning real estate bidding wars and has been in the market for quite some time.
Increase the Offer, If Need Be
While winning a house bidding war without overpaying remains our top priority, it is always wise to keep a Plan B ready. Ensure you have some backup sources prepared to provide quick money if needed. Then, if all else fails, simply make a higher bid to the seller. It is essential to know that this is a last resort. Use this strategy with discernment and ensure you do not overstretch your budget.
Make Things Personal
A home is personal and close to one’s heart, and sellers prefer to transfer ownership to someone who values it. As you pitch for a property, ensure you are unique and creative. You could write a letter to the homeowner, go on family dates, or be cordial and respectful. The simple art of personalising things can truly make you stand out and win a real estate bidding war.
When to Avoid a Bidding War and Stop Pushing?
Investments are made with wisdom. Knowing when to stop in a house bidding war is just as important as to keep pushing. Here are some common bidding scenarios where you should exercise caution and consider stepping back:
When Biddings Go Unexpectedly High
Ensure that the real estate bidding war does not become an ego contest. Always be ready to pay only as much as a property is worth, no matter how appealing it might seem. When other bidders begin to quote an unreasonably high price, it’s time to tip your hat and walk away.
The House Requires Big Repairs
Minor repairs and reworkings are understandable. But if the property needs a major overhaul, it’s a clear red flag. The last thing a home buyer would want is to spend a ransome first on buying the property and making it livable. This is a big no!
Stay True to Your Budget
Letting your budget keep your emotions in check is a good practice. If you have no room to make higher bids, feel free to leave a house bidding war. Buying a home should be a decision you look back on with pride, not regret.
How Do Real Estate Agents Help Navigate a Seller’s Market?
Real estate agents bring multiple things to the table. Their experience and expertise can be a game changer in real estate bidding wars. As compelling negotiators, they can help craft tempting offers without putting the buyer on the downside. They are also skilled strategists who can help tactically present a simple bid in a compelling and noteworthy way. Agents who have been in the business for a while have a distinguished network of connections. They can connect with mortgage brokers, inspectors, attorneys, and other professionals. Therefore, from emotional decision-making to objective understanding, real estate agents can support you all along the way. Given the importance of real estate agents’ position in house bidding war, buyers should collaborate with an agent they can trust and confide in.
Summing It Up
So, what has the strategy achieved? Instead of relying primarily on financial means, emotional and personal aspects have been leveraged to win the real estate bidding war. Often, people forget that real estate is more than just a business. Trust, credibility, promptness, and genuine care for the property are as appealing as a high price. Using these in your strategy can appeal to sellers more deeply and emotionally. With this basic principle by your side, you can go beyond these 10 house bidding tips, create strategies, and swiftly win the heated house bidding war.
You May Also Read :
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Understand Housesigma Canada |
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How To Sell Your Own Home |
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Navigate Laneway House in Toronto |
Frequently Asked Questions (FAQs)
Yes, bidding is legal in Canada. It is common in real estate transactions, particularly in competitive housing markets.
To win a bidding war on a house in Ontario, you can consider getting pre-approved for a mortgage, offering a flexible closing date, putting a down payment, and including an escalation clause.
The best strategy when bidding for a house is to be well-prepared with a pre-approval, make a competitive offer, and leverage factors such as flexibility and reliability to appeal to the seller. Is bidding legal in Canada?
How can I win a house bidding war in Ontario?
What is the best strategy for house war bidding?
