In many markets, including our own, the past few years have been tough on buyers. Even when the markets seemed to pause for a breath, the change hasn’t lasted – and the trend has continued to favour sellers.

Some first-time buyers find that the biggest challenge they face is to weed through the counsel they’re getting from all sides and figure out who to listen to. On the one hand, parents and others who remember saner times may have opinions that developed based on a balanced market, and they might offer advice that no longer works. Sellers and realtors, on the other hand, may encourage aggressive offers and new strategies that feel unsafe and unreasonable.

Unfortunately for buyers, bidding wars have, once again, become the norm with properties that are listed on MLS. It is not unusual to hear of five or more offers on an average-priced home. How is a buyer to handle this imbalance between supply and demand?

If you have decided that NOW is the time for you to buy, whether this is your first home or you need to sell and make a move, there are a few things you can do to increase your chances of getting your offer accepted on a listed property.

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1. OFFER MORE MONEY

So we start with the obvious. Without a doubt, most of the time, a Seller’s first priority is money. To be competitive, you must have your financing in place with your lender and know your numbers. Be clear on how much of a down payment you need, whether you will require CMHC approval, and what your budget is.

In days gone by, it was safe to look at homes that were priced a little over the budget and hope that, with some negotiating, you could get it for less. These days, quite the opposite is often true. It is wise to shop a little below your budget and allow room to offer over the asking price.

Remember that Sellers do not have to give Buyers a chance to increase their offer. They may simply choose the highest offer and reject all others. In a multiple offer situation, the best strategy is often to put your best offer on the table immediately.

Just a note of caution here: Work closely with your mortgage broker and your realtor to ensure that your lender will be willing to justify the price you offer. Lenders understand that the markets are going up, but they still use appraisal values to determine how much of a mortgage to offer on a property. If you offer more than the bank thinks the house is worth, you may have to be prepared to increase your down payment.

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2. INCREASE YOUR DEPOSIT

You secure your deal with a deposit, which becomes part of the total down payment on closing. Sellers often perceive the total of the deposit as a sign of how serious a buyer is about the property, and of how able they are to complete the transaction.

This is another element of the process that sometimes comes as a shock to someone who hasn’t bought a house in many years. The required deposit amounts are much higher than they remember – but then again, so are the prices!

For some sellers, a large deposit represents security, since they feel that a buyer will not walk away from a deal where they have much to lose. If you can increase your deposit, and you feel comfortable doing so, it may give you an advantage in a bidding war.

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3. BE FLEXIBLE ON CLOSING DATE

After price, closing date is the next most important element of the contract to most Sellers. The more flexible you can be with this, the more powerful your offer will be.

Depending on the situation, this could mean being ready to close quickly or being willing to delay closing.

If you are renting, a quick closing may cost you an additional month’s rent after taking possession of your new home (time you can use to paint, spruce up, and decorate, if you choose). If you have a house to sell, a bridge loan can solve the problem of a gap between your sale and your purchase.

If a long closing is more appealing to the seller, ensure that your mortgage approval can be extended, if necessary.

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4. REMOVE CONDITIONS

This part can be scarier than offering more money. The two most common conditions are financing and inspection. By working closely with your mortgage broker, you may be able to safely remove the condition on getting financing.  This is called making a “firm” offer.

It’s wise to be careful when choosing to remove the condition on inspection, though. An inspection offers a measure of protection from future headaches and expenses.

We don’t suggest that buyers just blindly make a firm offer without having an inspection at all. In a tight seller’s market, though, you may have a pre-inspection done before offers are presented. Some inspectors will provide a limited pre-inspection, reporting on only structural issues and major components of the property like the roof, foundation, HVAC, etc.

Another alternative is to view the property with a qualified contractor, if you know someone you trust. A thorough walk-through during a showing may be enough to make you feel at ease with forgoing a home inspection.

Always have your agent ask questions, in writing, to have the Seller disclose any defects with the house. They know the property best, and must answer truthfully.

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6. INTRODUCE YOURSELF

Many offers that come in during a bidding war include personal letters from the Buyers to the Seller. We have seen Sellers who become very emotional during the process of considering offers. Occasionally, a personal story will resonate with someone and make a difference in their decision.

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7. USE CONNECTIONS TO AVOID COMPETITION

If this whole frenzy of bidding wars and aggressive offers does not appeal to you, you are not alone. Even a few Sellers prefer a slower pace.

Try putting the word out among friends and neighbours that you would like to buy a place. Ask your realtor if they know of anything coming up that isn’t yet listed on the open market. You may discover an opportunity to make an offer on something more quietly and create a deal that works for both you and the Seller.

Please let us know if you would like more information about how to buy in these crazy times – we would love to help!