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How To Win A Bidding War For Your Dream Home

06/05/2017 04:23 EDT | Updated 06/06/2017 08:11 EDT
KeithBinns via Getty Images

Written by Lydia McNutt

The GTA's hot housing market could be cooling, if you've been paying attention to the latest monthly sales statistics.

According to the Toronto Real Estate Board (TREB), year-over-year sales were down 20 per cent in May, while listings were up 43 per cent.

Despite the hefty drop in GTA home sales and the big boost in active listings, inventory of homes on the market remains tight, at less than two months.

What does that mean for the prospective homebuyer? Unfortunately, prices are still rising and the competition is stiff.

Here are some tips for winning the war -- the bidding war, that is.

It's time for a reality check

Keep a level head when making an offer, and don't let your emotions get the best of you. Multiple offers may be rolling in on your dream home, but don't become a bidding war casualty. A home is only worth so much, and it's up to you to decide what that magic number will be. Set your budget and more importantly, stick to it!

Pre-approval peace of mind

Nothing tops the sting of finding your dream home after a lengthy and exhaustive search, only to learn that it's not actually in your price range. Ouch!

A mortgage pre-approval gives you the freedom to shop for your home, knowing that:

  • your lender has agreed to the sum;
  • you can actually afford the mortgage payments; and
  • you'll lock-in your low mortgage rate for up to 90 days, without the worry of rate increases weighing you down while you shop.

If you do find yourself in a multiple-offer scenario, you'll know exactly how much you can bid without breaking the bank. Then, make your best offer, and keep your fingers (and toes!) crossed.

Line up your soldiers

An experienced real estate agent, financial adviser and lawyer will guide you across the potential mine-field that is the housing market. These professionals will help you keep your emotions in check, and make a wise purchasing decision based on facts and figures, not feelings. Remember that a home is an emotional purchase, but it's also one to be made with your head, not your heart. This team of experts will guide you with an unbiased eye.

Compare and conquer

Once you have a budget and a team of professionals, you can hit the streets. Compare homes to others that sold in the same area. Your realtor has access to the Multiple Listing Service (MLS), giving you information like sales volumes, average price and days on market, both by housing type and neighbourhood. You can then make an offer that you're comfortable with, based on real market data.

#Winning

Make a smart bid that reflects what the home is worth and what you can comfortably afford, even when interest rates rise by one, two, three per cent or more.

Winning the housing market game can be viewed in a number of ways. To some, winning means getting the home they love -- at any cost. To the smart buyers out there, winning means knowing the difference between good value and over-value, and making a sound purchasing decision that you can live with for years to come.

For more essential real estate reading, visit YP NextHome.

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