You’ve found that home in Barrie that you want to buy. You call your agent up and say that you want to put an offer in. Then you find out that you are not the only one who wants to buy the home. You are going up against several others. Now you’re in a bidding war.
Many potential home buyers get really worried about bidding wars. They’ve watched HGTV or seen the news and saw people go hundreds of thousands over the asking price. They think they may get emotional and bid more.
So what can we do to handle a bidding war? With Barrie being tighter on inventory you may see it more. Still not as much as you’ll find down in Toronto though. If you see a bidding war in Barrie you’re more likely to see it go for asking or within only a few percentage points of the asking price. Very rarely will it go more than that.
One of the important things to do in a bidding war is set your high price ahead of time. This price is what you won’t go over for any reason. When you’re buying a house and want to set your high price then think of it like this. If you were to bid on a house and lose, then the next day find out what it sold for, if you would say “I would totally have paid that!” then thats the price you should go at. So figure out where that point is for you. What price that anything above it then that home isn’t right for you. That doesn’t mean that you have to go to the top of the budget but whats the top for you on that particular home. Just because you can afford a $400,000 home does that mean you want to go up to $400,000 in a bidding war. Perhaps you feel that it shouldn’t be over $350,000 so you set that as your high price for that home.
The other ways to handle a bidding war is to go past the terms besides just price. For instance, what is the ideal closing date for the home owner? If your offer is close to someone else’s offer but you offer their preferred closing date then you may win the home.
What about a conditional agreement? Are you including a condition for financing and a home inspection? While its a risk that can make an offer more attractive than the next person. You can even try to do a home inspection before you put in your offer if you want to be sure.
Bidding wars can be stressful and no one wants to end up in one. So be firm about what you are willing to do and don’t get caught up in the emotion at the time.