I was having a conversation with Keith Bray the other day and he shared with me the secrets of winning a bidding war for those amazing century homes in The Glebe. Now we’d like to share them with you.
The trick is really three-fold;
One, know what they are worth. If you are going to even consider getting involved in a Glebe bidding war you need to know what you are buying. To start, when we sit down with clients we go over the last years worth of sales to see what homes have already sold for. The listing price may have only been the starting point and when the dust cleared the homes commanded tens of thousands more. Watching the market for a few months in preparation can help.
Being ready for the reality of the homes values and what value they really sell for can allow you to see new listings with a critical eye. Yes they are asking x but we know it will really sell around y.
Two, have the money ready. Whether you’ve got a mortgage broker of your own or take one of our recommendation be sure to get pre-approved. Ask for commitment letter, and make sure your broker has all the paperwork they need to give you a 90-120 day commitment. You lock in the rates, have assurance you can afford the home as well as show the seller you are qualified to buy the home in a bidding war. If you are buying the home all cash, ensure the money is liquid and not in any jeopardy of being held up.
Three, stay flexible and move fast. You know the values and you have the money, so when you see an opportunity that meets your needs, buy it. If you’ve ever lost out in a bidding war you understand how quickly the process goes.
A property can come out on the market one day and be sold the next. We have shown client a property on Monday and come back on Wednesday for a second look to find the sign begin turned to sold.
Often times it’s the indecision or uncertainty that leads to a couple day wait and the loss of the property. This is one of the reasons we start the process early, explain to clients you may have to loose a few to get one. Let this one and the next one sell in a day or two, over asking price and you’ll begin to see the pattern and understand what you’ll need to do to win one of these bidding wars.
When the opportunity comes up you will be warned that there are competing offers but you won’t know what they are for. As a general rule if there is 1 other offer you should consider going 1 to 1.5% over list price, if there are 2 other offers 2 to 2.5% over list and beyond that it becomes anyone’s game. Offer what you feel comfortable with, what you know the home is worth based on the values you’ve been following.
We really recommend you find a way to have a home inspection, arrange insurance and have your bank approve the property. In a normal situation these would all be conditions of the offer but your best chance for winning a bidding war is to not have any conditions. So you may need to make arrangements a head of time. Have your inspector accompany you to the home viewing or standing by in case you like it to come do an inspection. Before you make the offer call your brokers and check out the insurance and financing worthiness of the home. This way you can go in without conditions and have same assurance a normal offer might have.
In the case of bidding wars preparedness is the key factor in being able to move on a great opportunity, by recognizing it, arranging for it ahead of time, and moving in without hesitation.
Hope this helps you understand real estate a little better.
As always if you have any real estate questions ask them below, or contact us directly at 613-788-2113