First, my apologies for the clickbait title. I was pretty sure that if I titled this article accurately, no one would read it. Here’s what this article should be titled, “There’s no secret to winning in a bidding war.” Confused?
Buyers often think that there is some hidden technique to winning in a bidding war. There isn’t. The only way to buy a house in a bidding war in Toronto is to present the best offer. This means that your offer price should be the highest and you should have the fewest conditions. With that said, here are four basic guidelines to getting your house in a bidding war:
Hire a local real estate agent: You should hire an agent who knows the area you are interested in. This agent will usually have insider information on new listings and will know all the other agents in the area. This will give you the advantage of hearing about listings before they hit the market, which, in a seller’s market where listings go quickly, is huge.
Find the last comparable property that sold and beat that price: This is how you end up putting in the highest offer. If a comparable semi down the street sold for $860,000 four months ago and you’re offering on a semi today, you’re going to have to beat $860,000. This gets back to my first point. A local real estate agent will be able to recite the most recent comparable sales in her sleep.
Hire a nice real estate agent: This sounds silly, but trust me. Your real estate agent should be a good negotiator, but this doesn’t mean that they should be aggressive or mean. Often, the best negotiators are very kind people. They listen to both sides of the story and then they figure out how to get the best for their clients. Your agent will be representing you directly to the seller. If your agent isn’t a nice person, or is overly aggressive, they can turn the seller off you. This happens a lot when the agent criticizes the house in an effort to convince the seller that they are asking too much money. The agent can say “You’re asking way too much money considering how dated your kitchen is, my client will have to put in over 100 k just to make it liveable.” The seller is probably thinking, “You’re talking about the kitchen that my husband put in with his bare hands? That I have lovingly cooked in for the past thirty years? That’s not LIVEABLE to your clients?!” Even if you do have the highest offer on the table, your agent has just really compromised your position.
Get mortgage pre-approval: I often feel like a broken record when speaking to my clients about the importance of mortgage pre-approval. If you want to buy a house in Toronto, you have to be prepared to move quickly. If you are one of several offers on a property and yours is conditional on financing, you may as well not show up.