This year has been full of challenges but, who could have predicted the crazy real estate bidding wars. The GTA saw record breaking prices that overflowed to the suburbs and cottage country. This “seller’s market” left some buyers, such as first-time home buyers on the sidelines.
However, there are some strategies that can be employed to help you get the home you want.
Here are some tips that we advise our clients to consider to get the desired result - a house!
1) Know your budget and stick to it. It’s very important to get mortgage pre-approval prior to searching for your dream home. The bank will advise you as to what you can afford from the standpoint of financing. If you have been saving for some time you may have a substantial down payment which will help with mortgage financing. Currently, mortgage rates are low which is beneficial to buyers. You must also consider your lifestyle and how much of your income you are prepared to contribute towards carrying your mortgage.
2) Engage a knowledgeable real estate agent or Team. A good agent will know the market conditions, will communicate with you at all times and negotiate on your behalf. He, she or the team will provide references for mortgage brokers so you can obtain pre-approval which may make a difference to the seller if other bidders do not have a pre-approval form to show. Your agent will also advise you on the value of the home you are interested in so you will be an educated buyer. These services are typically provided at no cost to the buyer.
3) Consider waiving conditions in your offer. Offers typically contain conditions involving financing and inspection. In bidding wars most sellers and their agents are looking for unconditional “clean” offers. However, there is risk involved in waiving those conditions. Financing pre-approval is not an absolute guarantee of financing. Final approval is contingent on the home being appraised to ensure that it has sufficient value to protect the financier’s interest. Financing should only be waived if you have other options available to purchase the home if pre-approved financing falls through. Also, if you really want to compete for the home you may want to consider doing a “pre-offer” inspection - a home inspection that’s done before the set offer day. This inspection will cost you some money, but it will let you know the condition of the home so you can either buy with confidence, budget your bid to reflect repairs, or walk away!
4) Have your deposit cheque in hand. Although it’s not a guarantee to success, this will show the seller that you are serious and you may end up with a firm sale that day.
5) If possible, make a personal connection with the seller. This works with some sellers as they may want to know who is going to own and love their “family” home. Write a letter about your family and how much you love the home and neighbourhood and slip in a family photo. There is no guarantee but, we have seen this strategy work when bidding is close.
Bidding wars are stressful for all parties involved. Dave and I have experience on both sides. We’ve strategized with our sellers to get top dollar for their home and we’ve strategized with our buyers to win their dream home away from the competition for a price within their budget.
Call us at 416-985-1486 and we can help you navigate the world of real estate.