How to Win a Bidding War in Edmonton

In today's economy, seeking to buy a house is difficult. COVID has encouraged many individuals to search for a place but has prevented many individuals from selling their homes because there are few choices. While every day I look at housing trend data as part of my work at yegismoving.com, every time my clients buy, it feels a little like the first time, particularly in such a hot market. 

I've learned a few useful lessons, no matter how seasoned you are, there is such importance of getting acquainted with the home buying process beforehand. With our first time home buyers, we have used some of these tactics, such as using yegismoving.com and saving searches, so that you can find out in real-time as homes hit the market. 

One of the most challenging aspects of the home quest was going toe-to-toe with other buyers in a bidding battle. I'm proud to say that we beat out the other investors and buyers, and our clients now own some beautiful properties in Edmonton. If you find yourself in the same situation, here are a few things to remember.

Tip # 1: Know your purchasing power. For all buyers, particularly first-time homebuyers who have never been forced into a mortgage payment, this is highly necessary. There is a lot of emotion going into buying a house and letting those emotions get the better of you is easy. If a home does not work with your budget, use a mortgage calculator to find out the maximum amount of house you can handle and be able to walk away.

Tip #2: Have your pre-approval ready - Sellers want to make sure the deal will go through at the end of the day. In today's dynamic market, pre-approval letters may soon be a requirement. You may also go a step further and get a pre-approval letter written by your lender unique to the property on which you are bidding. A pre-approval letter would serve to prove that you have the financial resources to buy the house.

Tip #3: Raise your down payment - A higher down payment or increase in your downpayment indicates to the seller that you are sincere (the deposit made before you make an offer). Higher down payments may be appealing when a bidding battle drives the sale price past the future assessed value. Another way to strengthen your interest, consider talking to your agent about boosting your deposit from the usual 1 percent to 10 or 20 percent of the sales price.

Tip #4: Give a great price - Cash is king for many vendors, and they will sell to the highest bidder. That doesn't mean, however, that you have tens of thousands of dollars more to sell. Sometimes, it will mean the difference between winning a house and losing it by only collecting a few thousand dollars. You'll need to bear in mind that it might not be your loan simply because you're able to pay extra. Your loan does not surpass the home's appraised value, but by taking more cash to the closing, you'll have to cover everything above the appraised value.  

Tip #5: Try waiving conditions - Warning this is not for everyone. While some buyers can go to lengths to waive financial and inspection requirements, it may come at an expense, or some sleepless nights at least to show how much they want a home. If funding falls through or renegotiates terms and fees or backs out if the inspection brings up significant challenges, conditions offer the purchaser the right to back out. Waving one or two conditions may be what it takes to get the home, but you're going to have to consider if the gamble is worth it.

Tip #5: Be prepared to act fast - If you believe there will be several offers on a house on which you are negotiating, ask your agent to draft several contracts for various buying deals. Preparing beforehand provides the opportunity for your agent to act quickly. Another way is to have an escalation clause as a supplement to the bid that lets the seller know that if any bidder meets your offer, you can raise the offer by a particular sum. If you agree to do the home inspection immediately, sellers will also support your bid. This will encourage sellers to know where they are standing with you and not lose time with other buyers.

Tip #6: Be adaptable -  Make things convenient for the seller. While some sellers may prefer to relocate as soon as possible, whether they are preparing for new construction or want their children to complete the school year, others may want to stay in their home longer. If you can, commit to a closing date that suits their requirements or encourage them to pick the date. Consider authorizing them to rent the house back for a fixed date after closing if they need more time.

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