Sold To The Highest Bidder

 

 

A bidding war is a stituation that arises when there are multiple buyers who are competing for the same property. They compete for ownership through a series of increasing price bids which can push the sale price past the original value of the home. Bidding wars in Ontario occur due to supply and demand and also are dependent upon how desirable a property is to a potential buyer. 

 

Whenever properties sell above the real estate market value this greatly benefits home sellers. Although, this is not ideal for buyers. Bidding wars make buyers vulnerable and create competitiveness amongst one another which can cause them to make quick decisions. Buyers also tend to submit offers with little or no conditions in order to secure a home. 

 

A real estate listing agents duty lies with the seller. They must always act in the best interest of their clients. If the seller wants to entertain multiple offers, it is the listing agents responsibility to do so. Keep in mind that listing agents are not at liberty to disclose the contents of competing offers although, they can reveal the number of offers.

 

You may be wondering why people compete in bidding wars. Those who are financially capable are more likely to engage in a bidding war, as welll as those who feel the value of a particular property will increase in the next few years. 

We tend to see people make emotional decisions when navigating through this stressful process. Bidding wars do create a sense of urgency as the more people interested in the same property can make you want it too. The 

competitve nature of this situation makes buyers want to close the deal as soon as possible, even if it means paying more money.

 

A survey in Ontario commissioned by RECO (Real Estate Council of Ontario) showed:

 

* 47% would pay up to 10% over their budget

* 31% would offer 10-20% more than their competition to win a bidding war

 

For the Greater Toronto Area (GTA) the numbers are even higher:

 

* 57% would pay up to 10% over their budget

* 38% would pay 10-20% over their budget

 

Would You Consider Participating In A Bidding War?

 

When participating in a bidding war it is imperative to stick to your budget as emotions can get the best of you. Look for homes listed below their intended buying price range. This gives you more negotiating power. It also prevents paying more than what is dictated by the real estate market conditions. Expect to spend more time visiting properties until you win in a bidding war. Remember that you may become more susceptible to going over budget if you become tired and frustrated by the process.