Three Ways to Win in a Bidding War - September 3, 2020
Ian Walterhouse
Thursday, September 3, 2020
Three Ways to Win in a Bidding War
With so few houses for sale today and low mortgage rates driving buyer activity, bidding wars are becoming more common. Multiple offer scenarios are heating up, so it’s important to get pre-approved before you start your search. This way, you can put your best foot forward - quickly and efficiently - if you’re planning to buy a home this season.
Javier Vivas, Director of Economic Research at realtor.com, explains:
“COVID-19 has accelerated earlier trends bringing even more buyers than the market can handle. In many markets, fierce competition, bidding wars, and multiple offer scenarios may be the common theme in the weeks to come.”
Here are three things that you can do to make your offer a more competitive one when you’re ready to make your move.
1. Be Ready
A recent survey shows that only 52% of active home buyers obtained a pre-approval letter before they began their home search. That means about half of active buyers missed out on this key part of the process.
Buyers who are pre-approved are definitely a step ahead when it’s time to make an offer. Having a pre-approval letter indicating you’re a qualified buyers shows sellers you’re serious. It’s often a deciding factor that can top the scale in your direction if there’s more than one offer on a home.
It’s best to contact a mortgage professional to start your pre-approval process early, so you’re in the best position right from the start of your home search.
2. Present Your Best Offer
In a highly competitive market, it’s common for sellers to pick a date and time to review all offers on a house at one time. If this is the case, you may not have an opportunity to negotiate back and forth with the sellers.
As a matter of fact, the National Association of Realtors notes:
“Not only are properties selling quickly, but they are also getting more offers. On average, Realtors reported nearly three offers per sold property in July 2020.”
In the Toronto area specifically, Lisa Patel, President of the Toronto Regional Real Estate Board President notes that:
“market conditions remained very tight in the GTA resale market in August. Competition between buyers was especially strong for low-rise home types, leading to robust annual rates of price growth.”
In fact, the average home price across the GTA increased by $159,270 from August 2019 to 2020. That is over a 20% increase in price in one year.
Make sure the offer you’re presenting is the best one the sellers receive. A real estate professional can help you make sure your offer is a fair and highly competitive one.
3. Act Fast
With existing homes going like hotcakes, there’s no time to waste in the process. The Toronto Real Estate Board reported that York Region properties that sold in August 2020 were typically on the market for only 22 days. The housing market rebound in GTA home sales continued with a record result for August. Home sales were up by 40.3 per cent compared to August 2019.
As you can see, the market is gaining steam. For two consecutive months houses sold very quickly. Essentially, you may not have time to sleep on it or shop around when you find a home you love. Chances are, someone else loves it too. If you take your time, it may not be available when you’re ready to commit.
Bottom Line
The housing market is very strong right now, and buyers are scooping up available homes faster than they’re coming to the market. If you’re planning to purchase a home this year, let’s connect to discuss the trends in our area so you are ready to compete - and to win. Email me at ian.walterhouse@century21.ca or call me at 416-522-1112.
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