Bidding War in Real Estate: How to Handle and Win a House
What is a bidding war in real estate?
- A bidding war happens when there are multiple offers on a house, usually in a seller’s market.
- There are more home buyers than the homes available for sale. The combination of limited inventory and high demand often pushes prices upward. The condos or houses are sold quickly, the buyers are pressured to remove conditions on the agreement.
- Then multiple offers designed by the seller and the seller agent more likely occur.
Can a realtor tell you what other offers are?
When there are competing offers on a house, real estate rules in Ontario request the disclosure of the offer numbers to the homebuyers who have viewed or plan to send an offer. The real estate laws also require disclosures under other situations. For example, there is a commission reduction agreement when the listing agent takes a cut in the realtor fee or there is a multiple representation.
However, the offer details like offer condition and price, are not allowed to be disclosed.
How to handle multiple offers on a house?
Before you decide to win a property, please consider the potential risks:
Does the high cost have any impact on the family and life in the mid and long term? Is it worth the price?
If a mortgage is needed, the lender may not lend you the desired amount since the appraisal’s value of the home would possibly be lower than that of your offer.
In case you remove the condition like a home inspection to increase the chance to win a house, what if the house situation turns out not as you expect and the house needs additional cost to fix?
How to win a bidding war when buying a house
Firstly, you can try to void a bidding war by placing a bully offer before the offer presentation date. There are a number of factors you may consider and a few technique applicable when you plan to try a preemptive offer. Please click the relevant link for explanation in details.
If you are still determined to win this house, there are some practices that might be of help. The effectiveness varies in different situations.
Make the largest deposit you can to show your interest and faith in the deal.
Proactively inspect the home situation and condition, in case you need to remove those conditions.
Possible change from condition to the seller representation and warranty
Consider shortening the time for the irrevocable period. A longer time may allow the seller to address other offers in the interim.
Be prepared to move fast.
The possibility of offering your best offer first if your budget is limited.
Set up a bottom line, and have an exit strategy in your mind. Sometimes, walking away might not be a bad idea.
