You’ve found it: the home of your dreams. It’s gorgeous—and perfectly-sized for your family. It sits smack dab in the middle of your favourite neighbourhood, and it contains every one of the features on your “must-have” list. There’s just one problem. Two other buyers want it just as much as you do and then comes the multiple offer situation.
What is a Multiple Offer Situation?
A multiple offer situation is when more than one buyer wants to make an offer on a home at the same time. This creates, in turn, a sort of bidding war where it is no longer a negotiation and more so a classic auction, with the highest bidder prevailing.
During my time as an agent, I’ve had many clients ask me about winning in multiple offer situations. When several buyers are after the same home, is it possible to tip the scales in your favour? Is jumping in even worth the effort?
Somebody is going to buy your dream home, and that person could be you. Fortunately, there are steps you can take to increase your odds of making it to closing.
Here are my top 5 tips for winning multiple offer situations:
1) Know the real estate market
In a multiple offer scenario, one of the most critical pieces of information is the number of bidders involved. That said, homebuyers often underestimate the importance of market conditions. Are you in a buyer’s market or a seller’s market? Are particular types of homes more in-demand than others? Multiple offers can occur under all kinds of conditions, and your strategy should reflect that.
Most homebuyers aren’t housing market experts, but an experienced real estate agent should be. Look for a representative with a thorough knowledge of the market in the area where you’re buying. Your agent should also be well regarded in the community—and inspire confidence in sellers and their agents.
2) Show you’re serious
Winning in multiple offer situations means showing that you take the process seriously. When sellers have their pick of buyers, the last thing you want to do is make them feel like you’re wasting their time. Don’t lowball them with the expectation that you can negotiate. In my experience, a seller with options will usually dismiss low offers out of hand.
When a home is in high demand, you may only get one opportunity to make an impression. So consider making your best offer first. Money is usually the deciding factor, and bidding high from the start is a good way to reduce your chances of being eliminated from the running.
3) Make your offer as clean as possible
Another way to appeal to sellers is to submit the cleanest offer possible. That means reducing or eliminating the number of homebuying conditions you include in your contract.
Inspection and financing conditions are fairly common. The former states that your purchase won’t be finalized until you’ve had an inspection performed. Most homes in Toronto come with a pre-list inspection, which means the seller has already had a certified professional give their home the once-over. In most cases, you can forgo doing your own inspection (and the associated fees).
When it comes to waiving your financing condition, a good mortgage broker can help you understand what’s at stake. For context, I spoke to local broker Joanna Lang. “What the client does is up to them,” says Lang. “But we can help them assess the risk of going firm.”
In our conversation, Lang stressed that it’s important for your broker and real estate agent to work together. From appraisal and pre-approval to your strategy for making an offer, having a team at work for you is beneficial at every stage of the purchase process.
One last nugget of wisdom on pre-approval. “It’s as good as the person providing it, and the work you put into it,” says Lang. In other words: choose an experienced finance professional—and provide all relevant documents upfront.
4) When possible, accommodate the seller
When it comes to winning in multiple offer situations, money isn’t always the only relevant factor. If you can make a seller’s life easier, it can play a major role in their decision. A cash sale is often a big draw, as it usually leads to fewer stumbling blocks during the buying process. But there are other ways to make your offer more attractive. Staying flexible is key.
A convenient closing date can make a world of difference. Whether the seller has to relocate quickly or needs some extra time to clear out, try to accommodate them if you can. It can also pay to be flexible when it comes to inclusions. A seller may want to take pieces of their home with them—even pieces that are nailed down or screwed in. If they love their gorgeous antique light fixtures, don’t let it become a sticking point.
5) Consider writing a letter
Many homebuyers are skeptical that an offer letter can sway sellers. To be honest, it often doesn’t. But there are times when a seller will look more favourably on a buyer who writes a compelling letter, especially if they’re having trouble deciding between two offers.
If you sit down to write a letter, be honest and specific. What do you like about the home in question, and why do you want to live there? Your letter is an opportunity to form a human connection with the seller—and underscore the positive aspects of your offer and it might help you win the bidding war.