How to Win Buying a Home in Competition
There used to be days where we looked at 3-4 properties a day, took a week or so to make a decision and then came back to make an offer, loaded with conditions.
These times are behind us for now and we have to adapt. The bidding wars in Hamilton has now actually surpassed Toronto, and hey, Why not? We have a great city and who wouldn’t want to live here right?
Hamilton is still in a very strong seller’s market and in these circumstances, a property’s asking price and its selling price can vastly differ, where the actual selling price can be well above and beyond the original listed price.
With more and more listing agents holding back offers to push for multiple offers, we wanted to put together a few pointers to get you ready for an offer battle.
As Realtors, we would never recommend a client to make offers with no conditions, but as circumstances change, we have to adapt to the market demands, and it is very common lately to see properties sell in offer battles, firm and way over the asking price. So what does it mean to make a cash/firm offer (with no conditions)?
It means that you are making an offer to buy without any ability to walk away later if you are unsatisfied with the purchase, cannot arrange financing or find any problems with the condition of the property.
In order to protect yourself, we now have to do the due diligence that we would usually do after an accepted offer, before. This is what we recommend:
Make sure you are fully approved and qualified to buy in your price range. Before making an offer without conditions, call your banker or mortgage broker and talk to him /her about it. Have your realtor send them the listing and make sure they can give you an ok before proceeding.
Do a pre inspection. Savvy home inspectors have already adapted to this demand and they can be available on short notice to inspect the property for you, so you can remove your inspection condition without worry
Have your realtor check for easements, encumbrances or rights-of-way that are registered on the title. Last thing you want is to have a firm deal, only to find out that you can’t put that pool or hot tub where you perfectly envisioned it.
Have your realtor asses the competition. You want to know how many offers there are, who you are competing against and what motivates the seller. Savvy Realtors will have their ways to establish this and give you an edge in competition
Establish your walk away price and make peace with it. Accept that the listing price might not be what the true value of the property is and that it is not uncommon to pay 30-50k above the asking price. Your realtor will show you comparable sales and if they know the market and demand well enough, they should know what the best price is to offer. Always make the final decision yourself and never be pressured into a price that you do not feel comfortable with.
Consider adding a cover letter to your offer. Some sellers care more about just the price and they want to know that their home goes to a great family that will take care of it and start their own memories there.
And finally, make sure that your entire household views the property before making the offer. If everyone is onboard, you will feel more comfortable to go to your max price.
Unfortunately, when in a multiple offer scenario, usually the highest and cleanest offer gets selected, leaving little room for negotiation. It is imperative that you work with a knowledgeable realtor that can help you to make the best offer and make sure that you are protected throughout the transaction!
Good luck out there and don’t forget, we are always here to help and never too busy!