Competing for the house you want is a reality you have to deal with when it comes to buying a home in 2016. This can often be a stressful process and one that makes a lot of people uneasy. The process often becomes even more stressful when you’re in a hot market.

Problems with a Hot Market

When people find themselves looking for homes in a hot market, it can be tempting to make emotional and hasty decisions which might cause you to ignore real facts about a house or neighbourhood. One thing I frequently remind my clients of is, just because you’re competing doesn’t mean you should ignore the market value of the home. It might seem like an easy solution to outbid everyone else who is interested in the home, but this might back fire on you when it comes to financing/re-financing your mortgage or down the road when you try to sell a home that you’ve overpaid for.

How to Negotiate a Hot Market

But with that said, in a hot market you do have to be more aggressive than usual to get the home you want. If you aren’t willing to get aggressive and be competitive with your offer, simply walk away, wait for another home or look for a home in a less competitive area. If you aren’t willing to jump through a few hoops for the home, it’s probably not the right home for you and you will just be fueling an already raging fire by adding extra offers to the mix…leading to people making poor purchase decisions.

Making an Offer in a Bidding War

These are the three most important things about making an offer in a bidding war:

  1. Price – this is the most obvious factor but the one that matters most when deciding if you can afford the home. You should always be competitive & justified with your purchase price in a competition. You may bid higher than similar homes have sold for in the past, but always try to keep it within reason.
  2. Closing Date – I typically ask what date the seller wants, and I give it to them.
  3. Conditions – this is where risk factor comes into play. Conditions cover many things, but most frequently give you the chance to secure your financing, sell your current home, or conduct a home inspection. Ultimately, it’s up to you whether or not to include these conditions in your offer. In a hot market using no conditions is not uncommon and gives you the best shot at getting the house. However, this can be risky because you will still need to personally satisfy these things before you can close on the home. 

If you don’t use an Inspection condition, you can always conduct a semi home inspection before putting the offer in.

If you don’t want to include a financing condition, make sure you are preapproved for a mortgage, have good credit history and a healthy down payment.

And if you aren’t sure what price to offer, use a LOCAL Realtor (I can’t stress this enough) to determine what price would be reasonable in the current market. If your realtor is not local, they have no clue what market value is and could unintentionally lead you astray.

Have more questions about how to compete for the home you love? Let me know and I’d be happy to help!

Posted by Greg Dewar on
Email Send a link to post via Email

Leave A Comment

Please note that your email address is kept private upon posting.