Whether you are a first-time buyer, looking to buy a bigger house or downsizing, it is important to be prepared. Currently, we are in a sellers’ market, which means some properties are selling within a day of being listed.
When this happens, buyers compete through bidding, and a property’s asking price and what it sells for are quite different. In most cases, the selling price will be well above and beyond the listed price.

When you enter a multiple-offer situation, you have less control, so you should prepare yourself by doing work upfront, and with the understanding that you might not get the property in the end.

During a multiple-offer situation, the seller is not obligated to negotiate or accept any of the offers. The seller is free to choose the best offer to negotiate and accept the one that best reflects their needs. While price is important, it may not be the only factor they consider. They may also look at subject conditions, completion and possession dates.
Here are some factors to consider to help you feel more in control when going into a multiple-offer situation:

Get pre-qualified and secure a rate hold by a mortgage expert

One of the most important aspects of buying a home is knowing how much you qualify for. You will know what you are comfortable paying monthly, but also what the highest amount is that you can offer. Once you are qualified, the lender must still approve the property you are buying. In addition, providing a pre-approval letter with your offer, increasing the amount of the deposit or any other unique circumstance that might influence your commitment to the transaction will help. A pre-approval letter can carry a lot of weight.

Prepare and have all your documentation ready

Provide your mortgage expert with all the documentation the lender is going to require upfront. Time will be of essence, so you don’t want the added stress of getting documentation when you are in the middle of negotiations and during the subject condition period.

Have the right real estate agent

Choose an agent who has your best interests in mind. As a buyer, it is not your job to seal the deal. It’s your agent’s responsibility to know what your limit is, and respect it. Don’t let your agent upsell you on the price and encourage you to go above your budget. It’s their job to research comparable properties in the area and advise you, but you are the one who makes the final decision. After all, it’s your money.

Set your boundaries

Once you set your budget, stick to it. Determine exactly how much you can go over if you end up in a multiple offer. Don’t get sucked in by emotion and peer pressure, because in the end, it can cost you a lot more money.

Consider doing a home inspection ahead of time

The buyer could consider your offer more readily if it doesn’t include a “subject to inspection” clause.

Do an appraisal ahead of time

This is particularly important, especially if you are paying above the asking price, as lenders will give you funds based on the appraised value. If you end up paying a lot of money for the property and the appraised value is a lower amount, you will have to come up the funds to make up the difference. In addition, lenders don’t only look at the value of the home. They also consider the economic life of the property, which can have an impact on the amortization period based on the age of the home.

Be flexible

Winning a multiple-offer situation might be as easy as agreeing to the seller’s conditions, such as closing dates, buying the property “as is” or even tightening the subject removal dates. This is important if the seller has already bought another property and is anxious to move on. By agreeing to make the transaction as easy as possible, it could mean winning over a more generous offer. Buying a property “as is” and limiting the subject conditions (such as requesting that a missing knob or floor tile be replaced), it might work in your favour. If your agent is aware of any information about the seller’s situation and if you can be flexible in any way, take advantage of this opportunity and it might help you get your offer accepted.

Write it down

Perhaps you might want to write a quick letter to the seller explaining who you are and why you want to buy their home. Buying and selling a home is an emotional time for everyone, especially if the seller has lived there for a long time and raised a family. Sometimes, it’s not just about the highest offer; it can certainly also be about an emotional connection. Even though your offer might be lower than the others, a seller might feel a strong connection to your story and decide that it’s not about the money but about someone who will really appreciate a great home!

Know when it is time to walk away

Multiple offer situations can be stressful, and sometimes listing agents strategically set the price of the home below market value to start a bidding process. Make sure you stand firm.

Finding your home

Buying a home is a great investment, and you must be smart about it. In the end, it’s about being comfortable with what you are paying a month and happy with the decisions you make. And, it’s about finding a home that will be a great place to start building equity and creating memories.