In a competitive market, buyers often find themselves going head to head with other people who want the same house they do. That’s the definition of “competitive” and the hard truth is it favours the seller.
The good news that I like to share with my clients, though, is that there are more factors at play than just the money you bring to the table – and that there are strategies for winning bidding wars.
Here are some of my thoughts on the subject:
1. PLAY TO WIN.
Knowing how your financial parameters relate to market conditions can keep you from entering into a bidding war that you aren’t likely to win. Start by finding out the average selling price and price range in the neighbourhood. Are the houses selling for 102% or are they selling for 110% of the asking price? This will help you anticipate what the house you’re looking at is likely to sell for. In my opinion, there’s no real point in making an offer that isn’t going to be accepted.
2. BE SEEN TO BE SERIOUS.
More than having your finances locked in with a pre-approved mortgage, it’s good to come to the negotiating table with something literally in hand. A certified cheque or money order is a statement of serious intent and reliability that can actually outweigh a competing offer – even higher offers – that require verification.
3. BE IMMEDIATE.
Offers that come with conditions prolong finalization. They postpone the end agreement and frustrate sellers. I have found that sellers are often more interested in closing the deal than in getting more money, if it means reaching an agreement now, rather than later. With due diligence and up-front work, having the confidence to make an offer without conditions can really make a difference.
4. BE CONSIDERATE.
Again, knowing that sellers actually care about more than money, it can pay to communicate your flexibility on other negotiated terms – like closing dates. Sellers usually have ideas about when they want to move out. Agreeing to long or short closing dates means accommodating their schedule, which will make a big difference to them. Overall, being able to say “No problem!” to a seller’s stipulations increases the chances of having your offer accepted.
5. NEGOTIATE FOR WIN-WINS.
I always emphasize that there are no winners and losers in successful negotiations – because it’s not a contest. The goal should be to reach a mutually satisfying agreement. When the bidding is competitive, remembering this philosophy is vital. You have to know when to walk away from a deal that’s not right for you, and you have to negotiate with the seller’s point of view in mind.