What Is A Bidding War & How To Successfully Navigate One
When you find a home you love, there’s a good chance someone else loves it just as much. That’s ok – this is a very common occurrence – and you’ll need to be prepared to put up a fight. A bidding war is where more than one buyer is looking to purchase a home at the same time and the competing buyers enter a blind auction to see who will ultimately win.
How do they work?
They typically occur when a seller and their Realtor choose a list price that is below the real market value in the area. Comparable recent sales can reasonably predict the home’s value and by setting a price below those sales – and sometimes considerably below – they set up a bidding war to get the highest possible selling price and/or the most favourable offer for the seller’s goals.
When do they look at offers?
The ‘Offer Date’ is typically five to 10 days after the MLS listing date and when offers are reviewed. This allows all potential buyers a reasonable amount of time to view the home, ensure mortgage financing can be obtained and make an offer – assuming the seller and their Realtor do not accept a ‘Bully Offer’ (an offer made before the Offer Date – more on Bully Offers later.)
Home Inspection – Yes or No?
A potentially dangerous game of roulette is played when it comes to removing conditions. On rare occasions, a seller and their Realtor will complete a Pre-List Home Inspection. In bidding wars and especially those involving several offers at the same time, it’s not uncommon for one or more of the competing buyers to remove their Finance and Home Inspection condition and go in with a fully firm offer – this is not to be gone into lightly.

If the seller has not completed a Pre-List Home Inspection, and you know that you absolutely love and want to buy this home, then do a Pre-Offer Inspection. Most sellers and listing Realtors will accommodate this.

Yes, your offer may lose and you are now out $400 to $500, but in a market full of horror stories of home issues being discovered after closing, it’s a worthy investment.
Your first offer: reasonable, but flexible
On the Offer Date, you and any number of buyers now compete blindly against each other. Make a reasonable offer and leave room to improve it because rarely will a seller choose from the first submitted offers. More than likely, the seller’s Realtor will push back and ask the buyers to improve some aspect of their offer: price, closing date or conditions.

The next offer and knowing when to walk away
It is especially during this second – and any subsequent – round of offers that you truly are playing a guessing game. What are other buyers offering? Is their price really higher than mine? Is their offer firm or is there a condition?

Like in any gamble, it’s important to keep a level head because you may be competing with a buyer who has lost before and is now determined not to. Think about those Poker shows on TV and that one player who decides they are ‘all in’.
No remorse, no regret
The temptation of bidding just a bit more is too dangerous a game to play. I always advise my clients on what the comparable data supports and what a likely bank appraisal may agree with.

There may be a time in the process where paying more is worth it, but that’s a decision to make under the advice of a trusted Realtor and a great mortgage advisor.

The rule of thumb I live by is ‘no remorse, no regret’. Make an offer that won’t give you buyer’s remorse if you win; and no regret if you lose the home by not adding just a few thousand more to the deal. Remember, there are always more homes coming on the market every day.
How can I help you?
Bidding wars may intimidate and seem scary. A professional Realtor with experience knows how to guide you through the process. Our team follows a very specific and systematic approach to calculate where the price may land given the numbers of competing offers.

Give us a call today. A coffee and a proper buyer consultation are free for you. Plus, getting the best advice in wartime will likely save you thousands of dollars and a ton of heartache.