Toronto real estate continues to be red-hot despite the pandemic and the concerns that the housing market would flatten. Today’s homebuyers are facing a real challenge in finding a home. Bidding wars are making prices climber higher and faster than ever and many buyers are getting frustrated at constantly losing out to other bids. So, what’s a buyer to do?
Have a strategy
To make a successful offer on a property in this climate you must be ready. You must know exactly where you want to buy and what you want to buy. When you know where and what you want to buy, you are better able to move quickly when that gem comes up for sale.
First through the door
Next, you need a realtor who is able to get their hands on listings before they hit the MLS. Being the first one in to see a property is probably the best way of ensuring you get first crack at making an offer. Even if the seller is anticipating listing the house and accepting offers up until a specific date, if you are able to see the house early and put an attractive offer on the table, chances are high that it will be accepted. Naturally, it doesn’t work in all circumstances, but smart sellers understand that having a good, firm offer is better than five weak offers.
To win a bidding war in Toronto you have to be prepared – that means having your mortgage amount pre-approved and having your deposit ready to go. In fact, the larger your deposit the more seriously you will be taken by sellers because they will see that you have a lot riding on the offer going through.
Sweeten the deal
One of the best ways to sway a seller into accepting your offer is to make your offer as attractive as possible. Get rid of contingencies if possible and offer to pay their closing costs. Although some experts will counsel you to forego an inspection, doing so is not in your best interests. Inspections are done to protect buyers who could otherwise end up facing costly repairs. If a seller wants you to forgo an inspection, you have to ask yourself “why”? And, you also have to determine how desperate you are to win that bid knowing that you might be facing some significant issue down the road.
If the seller is still set on accepting bids after you have submitted your offer, it is best to then include an escalation clause. Basically, an escalation clause states that you are willing to pay a certain amount over your offer price should the sellers receive something more attractive. However, if this is the case, the sellers must first prove that the other offer was higher and by how much.
Your best shot, but not everything
Lastly, while it’s important to go in with your best offer – it is also a good idea to reserve some of your funds for escalation. Putting in your max offer might get you on the table, but if you have to offer more, then you have to be ready to come up with those funds. By reserving some funds, you have a better shot of not overpaying and of still getting what you want.