In the Kitchener-Waterloo, Cambridge and Guelph real estate markets, it’s become more common for homes to receive multiple offers – a great situation for sellers, who end up selling for more. On the buying side, however, bidding wars can be INCREDIBLY frustrating – especially when you keep losing!
So let’s talk about WINNING. And not the “tiger-blood” kind of winning! made famous by a certain TV actor a few years ago – but actually gaining the upper hand when heading into multiple-bid negotiations.
As with many of life’s stressful situations, the more prepared you are, the better your chances of success. Follow these steps, and you’ll be bringing a flamethrower to a stick fight!
Know the Score.
If you’re working with a great buyer agent (which, if you’re not, we have many! – get in touch), they will provide you with insight into the current market conditions: what homes are selling for, how quickly they sell, and what kind of negotiations you can expect.
So, if homes in your price range and target neighbourhoods are consistently getting multiple offers and selling for an average of 15k over asking price within a few days on the market, you know what you’re up against and will not be shocked when you find yourself in such a situation. When you understand the game, you can develop a strategy to win.
Know Your Limits
Bidding wars can be stressful and emotional, which can lead buyers to make rash decisions they later regret. It’s crucial to know where to draw the line in the heat of negotiations. For example:
• Your max purchase price (and make sure you are APPROVED for that amount)
• Your earliest and latest possible move date
• Your bare minimum requirements (e.g. 3 bedrooms, 2 bathrooms, 2-car garage, swimming pool, etc.)
• Your comfort level with waiving conditions (e.g. financing, home inspection, sale of your property) and going in FIRM (and your buyer agent will walk you through the implications of each)
When you separate wants from needs and clearly define your limits, you’ll be prepared to make aggressive moves that unprepared buyers may not be comfortable making. Advantage: YOU.
Ok, Now Streeeeeeeeetch Those Limits (if possible)
While we don’t advise that you overextend yourself financially (and, quite frankly, banks don’t like that either), it’s important to start thinking about where you could be more flexible.
Some sample questions to ask yourself include:
• What living arrangements could I make to accommodate a later move date?
• Am I able to hold two homes at the same time? For how long?
• If I need three bedrooms, but the home I really want only has two, would I be ok with that third bedroom being in the basement?
• Am I ok finishing the basement at a later date?
• What tradeoffs would I consider? (e.g. a carport instead of a garage, a yard without a pool but large enough to build one down the road, etc.).
Being flexible and knowing your ABSOLUTE limits gives you more options and, again, the ability to make strong, calculated moves during negotiations without blinking. Again, work with your buyer agent to find out what reasonable concessions you are willing and able to make.
You’re prepared, you’re flexible – now get out there and find your dream home! Once you define your wants, needs and limits, your buyer agent will let you know immediately when a suitable home pops up on the market (and, in our team’s case, sometimes BEFORE it’s listed). When you see a home you like, do whatever you need to do to visit that home as quickly as possible. Waiting a day in a hot market can either cost you a home or, at the very least, give other buyers time to filter in and make offers. Be the first mover whenever possible.
Trust Your Gut (and Take Action).
We’re not saying that you should throw caution to the wind – just to trust your feelings and be confident knowing that you’ve thought everything out well in advance. So, when you’ve found a home that gives you great vibes, trust your gut and take action. While it’s entirely your decision whether or not to move forward with an offer, “sleeping on it” may cost you the home or tens of thousands of dollars due to the competition you invited by hesitating. Timing matters…don’t dawdle.
Don’t Get Cute – Play to Win.
In a multiple-bid situation, you have to presume that the other buyers – knowing that they’re competing – will do everything they can to get that home. While there is an argument to be made for not overpaying for a home – and your buyer agent can help you draw that line – you don’t want to lose your dream home and the years of memories it will provide because you tried to save $2000 spread out over 25 years. Put your best foot forward, and sleep well knowing you did everything in your clearly-defined comfort zone to get that home.
What if you lose?
Even the most prepared individuals still lose on occasion – but they’re much closer to winning than those who haven’t prepared. The key: consolidate your disappointment into minutes – not days! – and get back on the house hunt knowing you’re more prepared than the average buyer to win.
And you will win!