Tips and Tricks: Winning in a Competitive Real Estate Market

If you are planning to purchase a home you always wanted, we will give you some advice on how to be successful. Being a realtor from Toronto for over 25 years, I know how much frustrating it can be when you end up bidding against 15 or even more interested buyers. Naturally this summary is not enough for a greenhorn to become a successful buyer, but in any case it can bring you some useful tips and prevent you from spending more cash than necessary.

How to get pre-qualified

If you don’t get prequalified, you will be in much worse position as compared to someone who has proper financing in place. The seller has to be sure that you are able to pay for the home – when your financing is not clear, all the other advice will not help.

Explore the seller’s wishes

It is always good if you know the details about the vendor’s requirements concerning the prospective buyer, as it can save you some time going after an offer where you are not able to meet the requirements. Thus we always suggest to our clients that they should try to get all the details available about the conditions of the house sale. It is better to stop trying in case you find out you are not able to meet them. On the other hand, if you are willing to meet them, have your agent to provide a summary that will accompany your offer. This will give you an opportunity to present yourself to the seller and enhance the strong points of your bid.

Don’t underestimate the price

Now it is important not to propose an offer that is significantly below the fair price of the house, as this would probably make you an unsuccessful candidate and the seller would choose another buyer. Once you damage your reputation, it is not improved even after bidding a higher offer later. Thus the best way is to offer around $1,800 to $4,800 more than the highest estimated proposal. Imagine that you guess that the top bid would be around $470,000. Throw in a bit and propose let’s say $473,164 – you don’t always have to bid an even numbered price!

Down payment

The usual, best looking amount of the down payment is between 10% and 20%. Of course in most cases you can try to settle the final amount of your down payment with the seller after the contract has been secured and usually with a success outcome. The crucial point is that you actually pay the deposit after you sign the contract, otherwise you wouldn’t seem to be a respectable buyer.

Earnest money deposit

This is a really useful tip, however strong it may seem. Use as much of your down payment on your good faith deposit as you can (you loose this deposit if you brake the contract). You have to pay this money anyway, as the good faith deposit is included in the down payment, but it sends a strong signal to the seller. If you do this, the seller understands you have a serious interest in buying the home. This means that the earnest money deposit serves as a measure of your real interest in buying the house, regarding the fact that after signing the contract, you can usually change the amount of the down payment.

Propose a short rent-free stay

In the summary accompanying your offer, propose a free-post occupancy agreement to the seller in case they need a week or two in the property after it’s been sold to settle their affairs. This might be the final aspect that plays for you to win the deal, as in a different situation the seller would have to pay some rent, being no longer the owner of the property.