"Ask a Realtor" appears Thursdays. Have a real estate question for Susanne? Please email her at firstname.lastname@example.org, and she will publish and answer the questions of most general interest.
Q. What is the best strategy for bidding on a property that will likely get multiple offers?
In a seller's market, many "hot" properties come on the market and often with holdback offers. These homes are usually newly renovated, nicely decorated and have many features that buyers want. A "hot" property can also be a fabulous water front condo, a bungalow on a wide lot, a ravine property. There are many different versions of "hot!"
The property is listed with a holdback offer date at a specific time, one evening at the beginning of the next week. This comes after an open house for agents on the day the listing comes out and open houses for the public both days on the weekend. There may be a pre-listing home inspection available to buyers and their agents.
So, how can you get this house?
See the property on an appointment with your agent and have a second appointment with the rest of your family later in the week. Discuss with your agent comparable recent sales of houses in the area and specifically on this particular street. With condos also get comparable sales.
Make sure that you have been approved by your lender for the amount of mortgage that you may need. If you have a property to sell make sure that you qualify for bridge financing if the closing of the new house and your current house do not coincide. You should also discuss the applicable closing costs.
Read the home inspection if there is one available and discuss with your agent. Have any questions answered by the owner through their agent. If there is no home inspection, book one with a home inspector of your choice before the offer date.
If the property is a house, ask to see the survey and discuss with your agent. If not you will want to get title insurance. Your lawyer is a good person to speak with about this.
You will probably be asked for a bank draft of five per cent of the purchase price to accompany your offer. Arrange to have this ahead of time and by the offer date. Make it out to the listing broker in trust. On the day of offers, if they are to be presented at 7 p.m. that evening, you will meet with your agent to sign the offer sometime in the afternoon. At that point give your agent the bank draft regarding the deposit.
Your agent will be communicating with the listing agent to see if they expect multiple offers. By 5 p.m. you will have a better idea if you are alone in making an offer or if there are others. Once you know there are multiple offers, your offer is unconditional as you have your financing and you've done a home inspection. Price and closing date are now the two most important factors. You will want to give the seller the closing date that they ask for and go in over asking price if there is more than one offer.
Regarding price and how much to go over asking, you should only go as high as you are comfortable and you should discuss with your agent what your top price is. Also what is the top price at which the house will most likely appraise with a lending institution.
What the house sells for depends on many factors. What is the perceived top price for this property compared to recent sales of similar properties? How many offers are on the table? If there are two or three offers the process is fairly straight forward and the best price and the seller's closing date usually take the day. If there are four to six offers you usually have to come in at a higher price to stay in the bid to get this property and the seller may decide to just "work" with the two best offers.
Multiple offers range from two to 18 per cent over asking in a very brisk market. Six to 10 per cent is usually an average percentage over asking price.