Saira recently represented herself in a competing offer situation where she and 8 other buyers wanted the same property. Here are her tips for being prepared and how to keep cool in a hot market!
1. Know what you want!
One of the tools our team uses with clients is a needs, wants, wishes and deal breaker list. When you find a great property, always cross reference the list. Don’t get swept away with the pressure of multiple offers, make sure the property fits your requirements.
2. Move quickly
In a brisk market, you need to act quickly. We recommend seeing listings the first day or two they hit the market. Many sellers are setting a day and time when offers will be presented. The quicker you can get in to see the home, the more flexibility you'll have to satisfy conditions ahead of time or decide if you want to move forward with an offer.
3. Consider unconditional
We only recommend not including conditions like financing or inspection if you have satisfied these conditions a head of time. This could mean submitting a hypothetical deal through your mortgage professional to get a financing approval. You may also pay for inspections before you know you have the property. This can be risky, but it can give you a head start on other buyers. A prudent REALTOR® and mortgage broker will advise you of all the risks you’re taking with each decision you make.
4. Consider the long term
We always recommend to our clients to look at real estate as a long term investment. Are you going to be able to grow into this home? Are there options to finish a basement if you need more space? Can you suite the downstairs and keep it as an investment? Think of your long range plans and then consider if it will make a big difference to your life if you have to bid up the price to get your dream home.
5. Know Your Numbers
You should know exactly how much cash you need for a down payment, property transfer tax and closing costs at various price points - do you have enough? You should also calculate your ongoing monthly costs: your mortgage, property taxes, estimated heating/utilities, strata fees, insurance, etc! I love the Canadian Mortgage App for all these calculations.
When you're competing, I would focus more on your monthly cost (which you have to live with the term of the mortgage) and less on purchase price. Instead of asking, "Should I spend another $5,000?" ask yourself "Can I afford another $20/month?" This will help alleviate some of your stress when deciding on a price to offer.
6. Keep your cool
Understand that an offer is only a means to tie up the property until you satisfy your conditions. With multiple offers, you may only get one shot to put your best offer forward. If after you submit your offer the seller wants to further negotiate with you, I would say to trust your gut. Ask yourself all these questions: Am I going to be excited to get the home for this price?
Or, will I resent the home because I felt like I over paid? Is this a long term investment? Can I afford the monthly costs? Will I have enough cash on closing? Is this what I want? If I lose this home, is it the end of the world? (I assure you it’s not).
Competing to purchase a home is a lot like falling in and out of love. If you don’t get your dream home this round, don’t worry! When you find “the one” you’ll know why all the other ones didn’t work out. =)
In the end, Saira did not get the home and she was confident in her decision to not bid up the price past her point of comfort.