Nobody likes a bidding war when you’re trying to buy a house, myself included, but unfortunately that’s a reality many buyers are currently facing in Markham and surrounding areas.
The market is full of frustrated buyers. So, how do you win you ask? There’s much more to consider than just the price. Although, price is obviously very important so let’s start there.
When a listing has set an offer date, the listing agent and seller are obviously hoping to attract multiple offers with the intention of driving their price up and achieving a quick sale. A mistake that many buyers make is to place too much emphasis on the “list price” as opposed to offering what the property is really worth. Quite simply, a house is worth what a buyer is willing to pay for it, but it’s really important to study the comparable sales in the neighbourhood to put your own value on it.
“But the comparables indicate that the house is probably worth around $650,000 but it’s only listed for $599,000?”
If that’s the case and all the research supports it, then your offer should at least be in the ballpark of market value otherwise you won’t get the home, not in Markham anyhow, and in turn, you’ll help drive up the price for someone else and quite possibly, drive up the price for the next home you find.
So now that we’ve established what the home is worth, you’ll have to decide how flexible you are on your price depending on how many other offers come to the table. By rule, all offers must be formally registered with the listing agent’s brokerage and the listing agent must notify all interested parties of the other offers. They cannot disclose the details of the offers, only the existence of them. So, needless to say, more offers means more competition which generally means a higher selling price.
Different agents handle multiple offers in different ways and it’s important to ask the listing agent how they plan to proceed with the offers. For example, some agents will tell you that you’ll only get one shot, so come with your best offer, while others like to drag it out all night giving buyers multiple chances to improve their offer, before a decision is made. So you’ll need an appropriate strategy depending on the listing agent’s style.
“What else can I do besides offer a good price?”
There are other terms in the Agreement of Purchase & Sale that can make a significant difference, one of which is the completion or closing date. While price is very important, a seller’s decision can often come down to who has a more accommodating closing date. So make sure to ask what the seller’s ideal closing date would be.
“I’ve heard that other buyers are dropping their conditions. Is that crazy?”
Well, yes and no. Most Agreements of Purchase & Sale include a 5 day finance and a 5 day home inspection clause. This means that once the offer is accepted, you have 5 days to confirm financing with your lender and obtain a satisfactory home inspection report.
So, should you waive these conditions? That’s always a tough question but if you don’t, there’s a very good chance your competition is. Many sellers will accept a lower offer without conditions as opposed to a higher offer with conditions for the added piece of mind knowing that the deal won’t fall apart due to unsatisfied conditions.
Should you decide to waive your conditions, you must accept the associated risks. So when it comes to your financing, make sure you obtain a pre-approval but please know that a pre-approval is not a commitment. Should your financial situation change, your credit score drop or if the bank appraises your new home for less than you offered to pay for it, you might have to make up the difference.
When it comes to waiving your inspection clause, it’s never a bad idea to try and see if the Seller will let you do an inspection before the offer date. This might not always be possible due to tight timelines and a busy showing schedule, but it might be an option. You also risk losing the cost of the inspection if you don’t get the home, but it might be worth it.
The reality though, is that no home is perfect. Every inspection will reveal a long list of items and a never-ending list of maintenance items anyhow. If you pass on the inspection, I would recommend getting one after you move in anyways. It will serve as a great guide to keeping your home in top condition.
“How much should the deposit be?”
Your deposit is another common variable that can really help your chances. Not only is “how much” important but also “when.” Typically, most sellers will be looking for a 4-5% deposit. From a seller’s perspective, more is better because it shows more of a commitment from the buyer and decreases their chance of walking away from the deal should circumstances change. Typically, a deposit cheque needs to be certified or a draft and must be delivered within 24 hours of the offer being accepted. However, you also have the option to present the offer with the deposit cheque in hand which will help your chances that much more.
Lastly, “Be Available”
That’s right. It sounds simple enough but situations can change in a heart beat so it’s best that you’re not too far away. If you want to make any changes on the fly and you’re nearby to provide initials, that just might give you the edge over a buyer who’s on the other side of the city.
If you’re looking to buy a house in Markham, call or e-mail me anytime with your questions…I’d love to help you out!