If you are trying to buy a home in a seller's market - also known as a 'hot market', things can get particularly competitive at offer time. You will often be 'up against' several other parties as interested as you are in the property, and who are as keen to seal the deal with the best offer. And sometimes, at offer time, you can do everything right and still come up short. Ultimately the seller will choose the offer they think is best for them, and it just isn't yours.
There are other times, however, when you lose a ‘bidding war’ because something was slightly off: your offer amount, your contingencies or even your loan or lender. Here are some common scenarios and what you can learn from them, especially when home shopping in the Waterloo Region right now, where we are still very much experiencing a seller's market scenario.
There Was an All Cash Offer
When the winning buyer’s offer was all cash and didn’t include any contingencies, there’s nothing you could have done differently. All other things being equal, a seller will usually choose an all-cash, clean offer. And that’s simply because an all-cash offer can close in a matter of weeks instead of months, and the homeseller doesn’t have to worry about any contingencies.
There Was a Higher Offer
If the price you were willing to pay was lower than other offers, you may need to re-evaluate your home search price point. In a ‘hot market’, some homes will sell for more than their list price, and you may need to adjust what your max offer is.
Work with your real estate agent to help determine what your price point is and how it works into the current market conditions in the neighbourhoods you’re interested in. The one thing you should never do, though? Go over your budget ‘chasing’ a home that the price keeps going up on.
Another Buyer Was Willing to Waive Contingencies
An offer is often more appealing to a home seller if there are fewer chances that it will fall through, so offers with waived contingencies can be highly persuasive. Keep in mind that contingencies are meant to protect you, so waiving them entirely can be very risky.
Because every offer is unique, talk to your agent about contingencies you would be willing to waive in any given situation and make sure that you understand what you would be.
Your Proposed Lender Was an Issue
Some lenders simply have better reputations in an area than others. If a seller’s agent has had issues working with your lender in the past, it’s possible the seller won’t select your offer for that reason, based on information shared with them by their agent.
A seller may also more likely to choose a buyer who is working with a local lender over a big national bank, because local lenders are more familiar with regional laws and processes, and will usually use a local appraiser who knows the ins and outs and quirks of various neighborhoods. They may move faster too, another plus that the seller may have factored into their decision.
Brainstorm a Winning Strategy
Losing a bidding war is frustrating, but if you have patience and work with your agent to make adjustments to your home search and offer strategy, you’ll likely end up with a home you love, even if there is a wait, getting a home that is just right for you at the right price is an outcome that everyone should be happy with in the end.
Your agent is often the key to success. Local real estate agents are working in the market on a daily basis, and can see shifts and trends long before they are recorded and shared as official statistics. They will often have a far better idea of just what winning offers entail in real time - and it isn't always about money - and so are the perfect people to help you put together an offer that will get you the Waterloo Region home you want.