You’ve found the perfect home and it’s perfect with a capital P. It’s so perfect, in fact, that three other couples want it, too. So, what is a prospective house hunter to do?
That depends on your bank account and your temperament. Do you have the extra funds set aside for a competitive bidding deal that almost always sends the price tag upward? And can you stomach the suspense, the churning anxiety and the absolute disappointment that invariably comes with defeat? Because being involved in a bidding war is an emotional roller coaster.
A recent BMO Home Buying Report indicated that most Canadians would rather walk away from their dream home than get lured into a bidding war. Only 28 per cent said they would fight for a house. Of first-time buyers, 39 per cent were more inclined to pay above list price.
Bidding wars typically happen in hot real estate markets such as Toronto, Vancouver and Calgary.
Let’s take a look at the dos and don’ts:
Know what you can afford before shopping – You don’t want to get caught up in the drama and risk spending more than you can afford, so set a price and stick to it. You should also know the market value of homes in the area so you don’t get stuck over-paying for a house, no matter how beautiful. Your realtor can help with that. Also, try to cough up a larger down payment than the typical one to five per cent. That shows the purchaser you’re very serious and invested in this transaction.
Keep it simple – The fewer conditions, the better. Now is not the time to request that they accept your offer once you sell your house. In fact, if your offer is relatively clean this may be the tipping point for the seller to select your offer over other offers.
First offer – Make it your best because you may not get another chance.
Emotional flattery – Sometimes emotions do work in a real estate transaction. Write a letter to the seller about why you love their home and how you envision your family living there. Believe it or not, that may be the way to score the house. Don’t be insincere because they will smell it a mile away.
Sellers stand to gain substantially in bidding war as buyers attempt to outdo the asking price of each other. It’s the buyers who need to be reined in. But don’t let the naysayers turn you away from your dream house. Enter the fray armed with a realistic set price and nerves of steel.