You\u2019ve found the home of your dreams \u2014 it\u2019s in the perfect neighbourhood, just the right size and at a price you know you can comfortably afford. But, there\u2019s a catch. There\u2019s more than one buyer seriously gunning for the seller\u2019s confirmation of acceptance signature. So, how do you make your purchase offer stand out from the others and seal the deal? In the words of The Godfather\u2019s Don Vito Corleone, \u201cI\u2019m gonna make him an offer he can\u2019t refuse.\u201d<\/p>\n
Housing markets across Canada are in the midst of a seller\u2019s market \u2014 housing supply is low and demand for entry-level and middle-market housing is high, which means hopeful buyers are facing rampant competition. Bidding wars and multiple offer scenarios are the norm now, prompting buyers and their agents to get creative if they want to catch the attention of the seller. Maybe it\u2019s an appealing offer price, or even a buyer\u2019s letter that wins the seller\u2019s favour, but whatever strategy you pull from the playbook, you need to act fast.<\/p>\n
\u201cI\u2019m going to speak for the current market right now \u2014 inventory is really low, and things are getting multiple offers, so if you saw something that you like and they\u2019re not holding back offers, it\u2019s in your best interest to move as quickly as possible,\u201d says Roger Travassos, a Toronto-based sales representative with Re\/Max Edge Realty Inc. Brokerage.<\/p>\n
If you\u2019re heading into a multiple offer scenario or are preparing for an offer presentation night, never fear. With some pointers from Travassos, you\u2019ll be able to take your purchase offer from spectator to contender.<\/p>\n
Know the limit, and stay within it<\/strong><\/p>\n When making the biggest purchasing decision of your life, determining how much you can afford is not only a critical step, but is a sure means of determining whether or not you\u2019re a worthy competitor from the get-go.<\/p>\n If you\u2019re in the serious stages of a home search, it\u2019s generally advisable to have at least spoken to your bank or mortgage broker to understand what price point you should be looking at. Travassos explains that this step allows buyers to focus specifically on what they can afford and put forth a strong, confidently-priced offer.<\/p>\n With that in mind, in a multiple offer scenario, it\u2019s only worth participating if you\u2019ve got the financial chops to compete from a price perspective. If you\u2019re coming in at your maximum price point without much wiggle room, and you know that the property is entertaining multiple offers, Travassos explains that it\u2019s time to walk away.<\/p>\n \u201cSomebody else is playing to win, and when you put in an offer, in their mind, they\u2019re thinking, \u2018I have to make my offer that much stronger,\u2019\u201d he says. \u201cYou\u2019re essentially driving the price up when really you have no possible actuality of getting it.\u201d<\/p>\n Bidding wars are known to hike up the price of the property as buyers fight to outbid one another. In a scenario where there might be four, five, even ten offers, the sold price of the property will be beyond the top of your budget, and likely nowhere near where the original offer prices started at. Your time and energy is better spent in a bidding war where you stand a chance.<\/p>\n \u201cYou\u2019re really just playing a part in driving up the price. That price is going to be the new norm for the next sale, which in the end, hurts you. If you\u2019re not playing to win, don\u2019t play,\u201d says Travassos.<\/p>\n The offer presentation bully<\/strong><\/p>\n If you\u2019re looking for leverage against your competition, catching them off guard could slingshot your offer ahead of theirs.<\/p>\n A pre-emptive offer, also known as a bully offer, is one strategy buyers use to get their offer presented ahead of everyone else. When listing their home, sellers may decide to set an offer presentation date, a future day where they\u2019ll review all offers at once, which allows them to build demand and encourage bidding for their property. A bully offer is one that is put forward before the offer presentation date instead of waiting. As long as the seller doesn\u2019t have explicitly written instructions that they will not look at pre-emptive offers before the presentation date, the offer must be presented.<\/p>\n \u201cIn a market like this, where inventory is low, and it\u2019s a very strong seller\u2019s market, it\u2019s a good strategy for buyers,\u201d says Travassos. \u201cYou\u2019re catching people off guard, so people who want the property but may not have had a chance to look at it yet, [and] there\u2019s other people who\u2019ve had a chance to look at it that may not be as organized as you to act on it.\u201d<\/p>\n However, there\u2019s no point in expediting the offer review process if your pre-emptive offer doesn\u2019t bring something to the table, or you\u2019re not prepared. Make sure that you\u2019re organized \u2014 have your documents ready to go and financial affairs in order, and omit conditional clauses in your offer. Pre-emptive offers typically use a take-it-or-leave-it approach, so they shouldn\u2019t come with any strings attached.<\/p>\n \u201cIn a market like the one that we have right now, where you have to act fast, if you have a condition of financing or a home inspection, they\u2019re probably not going to accept it, especially if you\u2019re bringing it pre-emptive,\u201d says Travassos. \u201cIf you give an offer early, they\u2019re going to say, \u2018Well, no. How about you go and do a home inspection right now and get your financing together and we\u2019re going to leave the house on the market for a few days.\u2019\u201d<\/p>\n Adding a personal touch<\/strong><\/p>\n Coming out on top in a multiple offer scenario doesn\u2019t always boil down to money.<\/p>\n A real estate agent is an extension of you \u2014 the buyer \u2014 and your offer. A professional and personable approach can make the difference in a world where agents can act like jerks and limit face-to-face interaction during the transaction.<\/p>\n \u201cAggressive agents can throw off a seller, for sure,\u201d says Travassos. \u201cYour agent represents you and who you are. How they carry themselves and that transaction, to the other agent and the other seller, is huge.\u201d<\/p>\n When entertaining an offer, Travassos advises that presenting in person is the best way to go. It provides an opportunity to leave a good impression, give more information and allow the selling side to get immediate answers to questions. It also allows the buyer\u2019s agent to see the seller\u2019s reaction if the buyer chooses to write them a letter.<\/p>\n In a multiple offer scenario, adding the personal touch of a thoughtful letter can be enough to convince the seller on an emotional level.<\/p>\n \u201cTell them what you love about the house, tell them a little bit about yourself,\u201d says Travassos. \u201cI work with a lot of younger couples. Tell them what you\u2019re doing \u2014 you\u2019re starting a family, you\u2019re looking forward to building dreams in the house. Paint a picture of who you are and submit that with the offer.\u201d<\/p>\n In one such case, Travassos was representing the selling side with a homeowner who was very adamant on waiting for the right seller at the right price. After a while on the market, a buyer approached him with a letter, one that expressed a shared love for family and the life this buyer would make in the home.<\/p>\n \u201cAnd the seller came down, and was far more flexible than he had been in the eight months before this, and it was all because someone hit a string with him,\u201d says Travassos. \u201cIt meant something more than just a sale. He was giving it to someone like him.\u201d<\/p>\n