How to win a bidding war
Offering a wheelbarrow full of money is the best
way to make sure you get the house of your dreams, says Bruce Sworik,
a broker with Sutton Select Realty Inc. in London, Ont. "I like
your house, here's my wheelbarrow full of money, when do I get the
But for most of us, bidding on a home often isn't
a simple negotiation. Luckily, it isn't always the highest bid that
wins. In fact, if a buyer can ingratiate herself to the seller,
she can often win the bid, no wheelbarrow
This was true for Silke Hopf, of London, Ont., whose
offer on a 32-year-old, four-bedroom back split, purchased this
past May, was not the highest in a multiple-bid deal. But she and
her husband had certain advantages: They didn't put conditions on
buying the home and they met the owners.
"A private sale worked in our favour because
had it been through an agent, the price would have kept going up
and up. She (the owner) liked us, and that's what sold it,"
And when it came time to make an offer, they were
able to buy the home within days because they had spent weeks preparing.
Here's what you can learn from their experience in winning a bidding
- Get pre-approved for a mortgage with the letter
- Spend time with an agent to find a home within
your means. "If you're looking for a Chevrolet Impala, you'll
never know the best deal if you're looking at Cadillacs,"
- Know your cut-off price before you start bidding.
If things get emotional, you can fall back on the price you'd
decided beforehand you wouldn't exceed.
Now, you're ready to look at homes. To verify the
listing price is fair, look at how much other homes in the area
recently sold for. And by recently, Sworik means within the past
30 to 45 days. "If you're in a hot market, looking at homes
that sold six months or a year ago is not prudent."
To sweeten the deal, make the seller an unconditional
offer. This comes back to the wheelbarrow
full of money idea -- the luxury of selling your home quickly is
a dream come true for sellers who want a hassle-free exchange.
Make an unconditional offer:
- Offer no home inspection. However, if you suspect
mould or major defects, a home inspection will save you from buying
- Lay down a fat deposit. Sworik says you should
give them at least $5,000, but $10,000 is better. George Georgopoulos,
senior sales associate and negotiations expert for Sutton Group
Select Realty Inc., in London, Ont., suggests 5 to 10 percent
of the listing price, which can run as much $50,000.
- Give a quick closing date.
- Hold a neighbourhood party at the house the day
after or before selling. "This allows the neighbours to say
goodbye and buyers to meet them. It's an exchange of more than
bricks and mortar," says Georgopoulos.
Step up to the plate
When making the first offer, "don't put
in a low-ball offer. If you do, you're insulting people," says
Sworik. If there are multiple bids, don't put in anything less than
the asking price. If you offer full price, there is no negotiating
that. Often in a multiple bid, you only get one chance, so put your
best foot forward first.
"It's a race," says Georgopoulos. "In
the event the offers are identical, the seller may ask that everyone
resubmits at a particular time in a sealed envelope to be opened
all at the same time."
When, or if, a counteroffer comes back to the seller,
there are no guidelines about what to offer in return, says Ken
Harper, a broker for Classic Realty in London, Ont. "It's up
to the agent to interpret for buyers what their options are."
Don't wait too long to send in your counteroffer.
You may think you're making the seller sweat, but you risk losing
the house. During that time, better offers may trickle in.
Sometimes offering personal information with an offer
can sway a seller's decision. For example, it can't hurt a seller
to know you plan to keep the original trees. But if you plan on
paving over the lawn, you might want to keep that under wraps.
"Conditional offers subject to the buyer's mother
approving the colour of the carpet are not very well received,"
says Georgopoulos. Also, don't disclose your back-up plan to the
agent; keep the fact that you're offering $180,000 but are willing
to go $190,000 to yourself.
"As a buyer's agent, we don't want to know where
the buyer is prepared to go," says Harper. Put in your best
offer, and don't tell the agent if you'll go higher. If you don't
get the home, then discuss the next move with your agent.
The emotional roller coaster
If you do get the house, don't get caught up haggling over minor
details. Too many good deals go bust when buyers nitpick over appliances
or fixtures. Unless it's in the listing, don't expect to keep fixtures
such as a chandelier. "Buy the house first, then go back and
talk to the owners," says Sworik.
Don't feel like you have to buy the house. The thought
of losing a bidding war, especially if you've lost a few battles
in the past, can drive some buyers to spend foolhardily. With multiple
bids flying, people will increase the deposit, or even drop the
conditions, in hope of winning the home.
"It's worse than planning a wedding," recalls
Hopf, who lost sleep while waiting to hear if her offer won. But
Hopf's saving grace, which prevented her from overspending and losing
her mind, was being prepared to walk away from the deal.
"It's only a house. I would have been disappointed,
but I'm a firm believer if it didn't work out, it wasn't meant to
Melanie Chambers became a
home buyer last year in London, Ont., where she writes for publications
such as Active Woman Canada and the Globe and Mail.