4 Steps to Winning the Bid
Feeling Frustrated😠? Think you will never be able to win a bidding war in this crazy market? Are you losing out in multiple offers (often referred to as Bidding Wars)? The Rioux Baker Real Estate Team shares our top 4 steps for WINNING THE BID! 🏡
1. PUT YOUR BEST FOOT FORWARD 👣–
You may not get a 2nd chance so when you submit your first offer, MAKE IT YOUR BEST! Don’t assume you will have the opportunity to improve. Ask yourself this most important question, “If my bid loses to a competitor because they bid $1 (or $500, $1000, $10K, $100K) more than me, WILL I BE UPSET?” If the answer is yes, then the bid you have submitted is NOT your best.
2. DISREGARD LIST PRICE AND COMPARABLES 📈–
When you are competing, the list price and comparable sales mean nothing. If you love the property and you want it, then think about the highest price YOU are willing to pay for it. In a strong Seller’s market, the list price is just a starting point. Each property in the neighbourhood that sells, will set the price for the next new listing to follow.
3. WILL I BE OVERPAYING? 💰–
Overpaying generally suggests you will not get a return on your investment. As long as you are not looking to “flip” and sell the property quickly, you will probably have increased the return on your investment (ROI) before your dream home even closes! That is how fast the market values are changing these days. In a strong Seller’s market, the sale price of a property today will create the fair market value in that neighbourhood and prices will likely continue to climb. So, you are not “overpaying” when you bid more than the list price, even if you have to go substantially over list, you are setting the stage for sales in that neighbourhood and it is very likely that when the next property comes on the market, your sale price will be creating their list price, resulting in an increase on your ROI.
4. BE PREPARED 👩💻 –
Do as much due diligence as possible before you submit your offer. Is your financing in place? Has your REALTOR spoken to the listing REALTOR to find out if there are any issues or disclosures that you should be aware of? Will a home inspection be necessary? Have they had a septic inspection or pump out recently? In today’s swift moving market, you may not have time or the opportunity to include ANY conditions in your offer if you want to be competitive. You may not even be able to include any Seller representation and warranties (things like…The Seller represents and warrants that all the chattels, fixtures, mechanical & electrical will be in good working order!). A majority of Seller’s are looking for 2 things in all offers…HIGHEST PRICE WITH LEAST AMOUNT OF (IF ANY) CONDITIONS. This is a general rule of thumb and of course there are always exceptions.
And a final note about financing💵. Many clients tell us they don’t need a financing condition. But do you really understand the risks of not including this in an offer? Pre-approval does not mean you will get financing for that particular home. You, as a person, may be approved, but the property you are buying may not. For example. Let’s say YOU are pre-approved for a $600,000 mortgage. Meaning you have the means to carry the financing on $600,000. The house you want to buy is $550,000. You think you are good to go and so you do not include a finance condition. You win the bid and your lender sends an appraiser out to look at what you just bought. The appraiser values the home at $500K and that is what they tell your lender that they should lend on. So now your lender says they will supply financing of $500K. You are $50K short to close your deal. Where will you get this money? Do you have extra savings that you can put towards it? Where will you get this shortfall money from? Those are the things you need to consider when you say you won’t need financing. Have a good, honest discussion with your lender about if you will need a financing condition when you go to purchase. Know what you are up against before you go down the road to home ownership.
So, if you find yourself in a multiple offer situation, keep these 4 tips in the back of your mind and there is a good chance you may have the winning bid! 🏆🏡