Buying a home

Beyond the offer: strategies to help win in multiple offers

Not all offers are created equal. In a seller’s market, the strategy behind the offer is what counts.

 

 Photo by  Helloquence  on  Unsplash

Photo by Helloquence on Unsplash

Buying houses is something most people do only a handful of times throughout their lives. Each time, they must become acquainted with the current market and financing rules (watch for an upcoming post on the changes effective January 2018!) and as well as changes to the overall purchase process. Today, I am going to focus on the buying side of the process, as this has been particularly challenging over the past 6 months in Ottawa.

 

Parts of Ottawa market experiencing Seller's Market conditions

First of all, what is a seller’s market? Simply put, it is a market where the demand for houses exceeds the supply, therefore driving up the competition for the homes that are listed. This often results in three things: multiple competing offers on one listing, higher market value (the price people are willing to pay) and shorter time on market. October 2017 statistics in Ottawa indicate this is the trend, reporting average residential sale price has climbed 7.7% to $425,256 over October 2016, as well as fewer days on market; down 17.7% from 55 to 45 days. 

In a seller’s market, multiple offers are quite commonplace. They are great for the seller, but add to the already stressful process of submitting an offer. This is why having a strategy behind your offer is so important. You may be wondering how something like an offer, with standard required elements, can have a strategy. This is where a real estate professional who is representing you, the buyer, earns their dough!

 

Money doesn’t always talk, but in a seller’s market, it tends to have a pretty loud voice!

In a seller’s market, buyers want to make their offer more attractive than the competition. This can create what is commonly referred to as a ‘bidding war’.

In a seller’s market, money does talk, quite loudly actually, BUT it doesn’t always come down to how much you are willing to pay. But what happens when you don’t have the financial resources to outbid the competition or it’s just not wise to overpay on a particular property?

Here are other ways that other parts of an offer can contribute to an accepted offer:

Closing date

In some cases, the closing date is more important to a seller than the price they get for the house. Maybe they have to move by a certain date (common in military moves) or they have another house they have an offer on, that requires them to take possession on a certain date. At any rate, don’t discount the importance of this detail. I like to establish a good rapport with the selling agent right from the get-go to find out if possible how much the closing date weighs in their decision making.

Conditions: Not all conditions are created equal!

Certain conditions are quite typical when it comes to an offer. Usually the following 4 are included:

1.       Financing – buyers can go back to their financial officer or mortgage broker to ensure their financing is approved to purchase this particular property

2.       Inspection – buyers can make the purchase conditional upon an inspection taking place, and that the findings are to be taken at the buyer’s sole discretion.

3.       Insurance – the purchase is conditional upon buyer’s securing insurance for this particular property. Financing is also usually contingent upon securing property insurance.

4.       Legal review – this is not as regularly included, but again, protects the buyer. It provides the opportunity for the buyer to have their lawyer review the offer to ensure their interests are legally protected. Some people opt to exclude this. Discuss this option with your real estate professional to see if it is right for you.

NOTE: Other standard conditions that may be included apply to rural properties (well/septic inspections) and condominiums (title search to ensure reserve fund is adequate, among other items). Today however, we are focusing on the 4 above that are typically included in all offers.

 

The strategy behind the conditions creates winning offers

This is when the conditions in the offer come into play. They vary in complexity and circumstances for every single buyer, seller and transaction. Therefore, not all offers are created equal!

This situation is when your real estate professional should step up and provide expert guidance, as well as drawing on other resources like your mortgage broker or financial officer to help determine if, for example, the condition of financing can be waived. If this is the case, it can make an otherwise lesser offer much more appealing to the sellers, as it is telling them that there is no chance for the deal to fall through on financing.

The flip side, however, is that you, the buyer, cannot back out if you end up not being able to secure financing. I cannot stress enough the importance of working with experts to ensure you won’t be stuck with a house you can’t get financing for! Working with professionals is key to protecting your interests!

If you are able to exclude the condition of financing, it can really help swing the odds in the favour of your offer in a multiple offer scenario. It is by no means a guarantee, but it’s an excellent strategy that can make a difference, resulting in a winning offer as financing tends to be the condition that does carry the most weight for sellers when they are considering offers.

 

BE PREPARED!

Because time is of the essence in a seller’s market, it is wise to sit down ahead of time with your real estate professional to discuss these strategies and have a game plan in place, so when the time comes to put in an offer, you have already done the leg work for the financing and have all of these details sorted and ready to go. The devil really is in the details and having an experienced real estate professional with a network of resources at their disposal can minimize the stress associated with multiple competing offers, not to mention increasing your chances of coming away with a winning hand!

 

Are you ready to buy? Let's chat about your individual strategy to make it happen! Email me!

Final walk-through before closing: Here's why its a good idea for buyers

Congratulations! You have bought a new home! After the emotional high of having your offer accepted, and the whirlwind of setting up and attending the home inspection, getting your financing secured and finding a lawyer, the last thing you’ll be thinking of is what colour paint would look best in the bathroom! That’s normal. It’s also why having the opportunity to view your new home one or more times prior to closing is such a great idea.

 The opportunity to view the home one (or more) additional times before closing day is a term that should be included in the Agreement of Purchase and Sale (APS) at the time the offer is made for the benefit of the buyers.

The opportunity to view the home one (or more) additional times before closing day is a term that should be included in the Agreement of Purchase and Sale (APS) at the time the offer is made for the benefit of the buyers.

Most closings are at least 30+ days after the inspection occurs, and details about your new home can become foggy in that time. Not to mention, the inspection is focused on things that could be wrong with the house, leaving you thinking about how to get those issues resolved – hardly the head space to be contemplating new appliances and selecting paint colours! A final walk-through is a time to reflect and review your new home without distraction. Here’s how to get the most out of it:

Measure & take photos: Now is the time to look at the space, imagine your furniture, and take photos and measurements for new purchases. Record ceiling height for ordering new drapes, window size for other window coverings, make note of the paint colours and light fixtures that are being left behind. If ordering new appliances is in the plan, make sure to take accurate measurements of the spaces. You would be surprised how many options there are for refrigerators – measure the opening for height, depth and width. Take measurements for furniture too – especially if you will be moving large pieces down a basement stairwell or other tight spaces.

Paint selection: It’s always best to select paint colours in the actual rooms and spaces they will be used in, and more importantly, that they will be lived in! Never trust store lighting (yuck) and paint chips to choose your new paint. Colours change dramatically with light conditions (natural and artificial), and when placed next to other colours/tones like flooring or cabinets. I have personally spent the entire hour of a walk-through helping people choose their new paint colours! It was fun for me, but is also super smart to do in to avoid costly mistakes.

Check for anything that has changed: As the saying goes, Sh*t happens! Since the inspection, the house (usually) has continued to be lived in which means things can break or become damaged. Use this time to go through and check to make sure everything looks OK. Check for obvious damage to walls (easy to dent when moving and packing), make sure vent covers are intact, screens don’t have new holes or damage, blinds are functional if they are being left behind.  Check the carpets for new, noticeable stains, and wood floors for dents and scratches etc.

Please note! I’m not talking about simple wear and tear – I’m talking about very obvious damage. Gaping holes in drywall, very obvious stains and damage of floors, broken doors, windows, etc.. With your agent, document everything and take photos to send to your lawyer so they can decide with the seller's lawyer what can be done. 

This is a great opportunity to visit your new home that you have no doubt been dreaming about since inspection day! Make the most of it and use the time wisely to prepare for your move, and most importantly, save yourself time, money and frustration by knowing exactly what you can expect on closing day.