GREATER TORONTO AREA REAL ESTATE BLOG
Bidding wars – Love Them? Or Hate Them?
Bidding Wars in Today’s Real Estate Market.
Are Bidding Wars the norm in today’s real estate market? That really depends on what you are selling. Is it a condo in Mississauga or a million dollar mansion in Richmond Hill? Odds are you are far from bidding wars. Is it a bungalow or a semi close to Toronto’s core? Then, hell yes! In this case if you are a seller you are running the show. And if you are a buyer you better buckle up for a looong & in many cases painful journey.
Having been on both sides of bidding war dramas, I can tell you that it is a tale of 2 stories. As a seller you love bidding wars. As a buyer you hate them. It is that simple. Anyone can say what they like, but if you are a seller and you have an opportunity to attract multiple offers and you choose not to, then you are either working with the agent who is not representing your best interests or you don’t want to sell your home for top dollar and make money.
Yes, multiple offers, in some cases, are a cause for some shady activity which can result in disappointments for buyers & their agents. And that is exactly why big chunk of agents choose to advise their buyer clients to stay away from multiple offers. But let me ask you this: What if you are set on buying a freehold property in a high demand area of the city? What if you are prepared to fight against 5, 10, 15 other offers and try to nail that purchase sooner or later? After all if you want to buy that home in a premium area of the city then you better work with someone who can help.
If buying in a prime location, ask yourself this: “Did that area you are looking to buy in attract multiple offers last year? The year before? 5 years ago? 10 years ago?” Odds are the answer is yes to each one of those. Further, if you check the stats (via your agent), you will notice that the areas which attract multiple offers will usually outperform the areas which do not… and in many cases that is where the gold mine lies. After all, the old and in many cases forgotten term ‘location, location, location’ seems to prevail when going for bigger capital gains.
So when the time comes and you are thinking of buying a property in the area that draws bidding wars, be prepared to fight, and above all be represented by an agent who will guide you along the way. If your agent is telling you to stay away from bidding wars and buy elsewhere, you may want to Fire Them and find someone who will help. The reality is that on average Realtor will have to spend 5x more time looking for a property for their clients in a bidding war area compared to a non-bidding war area, and that doesn’t include all the extra work they’ll have to deal with.
Risks Associated with Bidding Wars?
Yes, there are always risks, and as such consider yourself warned that when you are involved in multiple offers most offers on the table are firm, meaning they have no conditions. The traditional clauses of inspection & financing are omitted (unless you and/or your agent want to waste your time), so it is up to you as the buyer to do the due diligence before you bring that offer to the table. It is very common in today’s market for potential buyers to do their own inspection (at their cost) prior to ‘offer night’ only to end up loosing in the end.
So yes, know what you are getting into, but as mentioned earlier time and time again I see those involved in multiple offers see greater return in the years ahead. It is in most cases a battle worth fighting.
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