Top 5 Ways to Guarantee You Lose a Bidding War
It's wishful thinking to think you'll get through 2018 without competing in a bidding war.
Well, the Spring market for 2018 is right around the corner - although some may argue it's already begun - and if the activity in the condo market so far is any indication of things to come, it's going to be a very busy Spring!
Anytime I run into someone in my building, or get a call from a previous client just wanting to catch up, the first question is always "so how's the market?" To be honest, I love when I'm in the elevator and someone whom I've never met asks me that because at least they know who I am! I kinda feel like that's half the battle in this game. But I digress.
What's interesting is the past few times this has happened, the question has been followed up with "Things have calmed down, yeah?"
I've been puzzled by this follow-up question lately because anyone who is actually in the market right now (buyers, sellers, or agents) knows that it is anything but calm out there. Especially for condos. But then I have to remind myself that most everyday folks only hear about the market through CBC or CP24 or some random Toronto Star article and the headlines still read something like "Toronto Home Sales Plunge" and "It hasn't been this affordable to buy a home in Toronto for 3 years".
I honestly don't know where these reporters get their info, or maybe they chose to focus on a specific suburb of the city like pockets of Markham where yes, the market has slowed significantly. But if you think Toronto-proper is as affordable as it was 3 years ago, especially the condo market, you will be in for a shock. Maybe you'll try to send me one of those articles and say "but Adil, this articles says this, that, and the other about the slowdown in the TO housing market". Then I'll have to show you why you need to listen to someone who actually knows what's going on, and not someone who needs to sell newspapers.
Anyway, back to the real point of this post. If you're a buyer in this market, whether a house or condo, you'll need to get used to bidding wars, the bidding process, and the things that will help (and hurt) you from actually winning. So I thought I'd put together a little homage to David Letterman with my own Top 5 ways to guarantee you'll lose a bidding war in Toronto today:
#5 - Having Conditions on Your Offer
Sellers want to know that on offer night, if there are indeed multiple offers on their property, the deal is done that night. If a property has an offer night, chances are the listing is under-priced to begin with to attract as much attention as possible. I wrote about the message having a scheduled offer night sends to agents and buyers in a previous blog. So if your agent says "offers are being accepted on Tuesday at 7pm", make sure s/he educates you on what this means. If there are multiple offers, and your offer has a condition of financing and home inspection on it, your chances on winning diminish significantly. Trust me. And for the folks that still insist on keeping a financing condition on their offers on offer night because their bank told them to, it will be a long Spring for you. Sorry, but it's true.
#4 - Trying to Negotiate
I'm going to go back to that previous blog yet again about this point. The general public can't see the Brokerage Notes on MLS that give agents additional info about listings. The most important info in this field is how/when offers will be accepted. If I see an offer date, I instantly know that the seller is looking for more than the list price. This may not actually happen and, as I've seen time and time again, just because a listing is holding back offers doesn't mean they will get offers above asking. But that's the message it sends. So if you are bidding on a property that already has 4 registered offers, please, please, please don't try to convince your agent to submit an offer below asking because "it's worth a shot". It's not.
#3 - Making Your Offer Confusing
I've seen offers where the buyer expects the seller to remove wallpaper before closing or the buyer wants 30 days after their offer is accepted to try and find a parking space before firming up, or the buyer's agent forgets to put a closing date or appropriate title search date. The latter is really the fault of the buyer's agent but it makes the offer confusing nonetheless. If I'm on the receiving end of a multiple-offer situation and one or more of the offers are messy, confusing, or incomplete, I'm less inclined to tell my sellers to work with it because, well, if they can't put an offer together properly, what else will go wrong on this deal? Your agent is soooo important here I can't emphasize this enough. If your offer is confusing to the listing agent, it won't get done. So please, if you are using your cousin or brother-in-law as your agent because you feel obligated to, just make sure he's done this successfully before.
#2 - Not Giving the Seller What They Ask For
This one is a little less cut-and-dry but on certain listings, the seller will be quite adamant about certain things - like they cannot close in less than 60 days, or that chandelier in the living room that's been passed down from generation to generation absolutely is not included in the sale. But some buyers will still insist on making their offer based only on what seems best for them as buyers, while ignoring what the seller is very clearly asking for. Don't get me wrong, most things are in fact negotiable. So if you as a buyer absolutely must close in 30 days on that house, maybe the seller will be agreeable if you throw them a price that blows everyone else out of the water. But unless you check with the listing agent first, don't just assume you will get what you want. I've seen deals fall apart over what seem like trivial things and in a multiple offer situation, it's very easy for a seller to just put aside an offer because the buyer "didn't listen" and just move on to the next one. Remember, as a buyer you are in competition with other buyers. So it's not just about you anymore.
And the #1 way to guarantee you will lose a bidding war is....
Not Offering the Best Price
So this one is probably a little anticlimactic but the single best way to guarantee you'll lose a bidding war is not offering the best price. Look, some sellers will choose an offer based on the best closing date or the biggest deposit or the fact that they connected with the buyers during one of the open houses (sellers, please don't be home during your open house!) But without question, price is first and foremost the biggest motivating factor in any deal. Money talks. After all, if money wasn't the most important thing to the seller, why hold an offer night to begin with?
Adil Dharssi Sales Representative iPro Realty Ltd, Brokerage Direct: 647-223-1679 (call/text) Email: Adil@AdilKnowsCondos.com