In a hot real estate market like Vancouver, it isn't too far of a reach to expect to be in a multiple offer situation at some point. These situations, which are also referred to as "bidding wars," require the buyer to compete for the home with other potential buyers. Though this often takes the bidding power away from the buyer and gives it to the seller, there are still plenty of tactics the buyer can use to increase their chances of winning the war. If you’re in a bidding war for your next home, try using some of these strategies to edge out your competition.
The Deposit Bump: Increase the Amount You’re Willing to Part With
Though there isn't a specific standard for deposit amounts, there certainly is an expected minimum when it comes to your contract of purchase and sale. When you find yourself in a multiple offer situation, you should consider increasing the deposit amount above what is generally expected to show that you are able to make the purchase and that you are serious about finishing the deal. You can also adjust the terms of the deposit; sometimes offering the deposit upon "final acceptance" of the offer, as opposed to the typical standard of giving the deposit after all subjects are removed, will entice the sellers to pay special attention to your offer over the others.
Subjects: Make It Straightforward
The fewer subjects your offer has in it, the more likely the sellers are to take it seriously. Though you likely want to keep the standard subjects in your offer in order to protect yourself should the inspection turn out poorly, or should your financing fall through, you want to make your offer as straightforward as possible – especially if your sellers believe that your subjects will ultimately be removed and the sale will be finalized.
Be Flexible And Cooperative On The Dates
Agreeing to let the seller dictate the completion and possession dates might give you a huge advantage if you’re caught in a bidding war. A great way to get this settled sooner rather than later is to simply ask your real estate agent to confirm with the listing agent which dates their clients, the sellers, prefer. If the sellers have committed to purchasing another home, you can see how completion and moving dates become critical.
Money Talks: Up Your Bidding Price
Last, but certainly not least, always keep in mind that money talks. Though the previously discussed strategies are quite influential in determining which offer the sellers will choose, generally the most attractive offer is the one with the highest number attached to the dollar sign. If you really love the home and know it's the one for you, and you're up against one, two, or three different buyers all at once, don't be surprised if your real estate agent insists you match the asking price or even offer greater than the asking price on your initial offer. The fact of the matter is that bidding wars drive the selling price up – sometimes well above the asking price.
If you are a buyer in a bidding war, you should assess not only your capability to purchase the home should the sale price go above the asking price, but also your desire to buy the home. If you're certain that this is the home for you, then don't hesitate on the above aspects of your offer, and come in strong the first time around. A good price, beneficial dates, uncomplicated subjects, and a strong deposit amount will give you all the ammunition you need to come out of a bidding war with a deed in hand.Posted by Rick Clarke on