What to expect when your offer to buy a home is in competition

Have you heard the stories going around about multiple offers on properties two minutes after it’s come onto the market and it sells for $100,000 over asking price? Well, that may be a bit exaggerated and I’m sure there are stories out there that are, although the excitement and craziness has stirred up activity like that when buying a home in Calgary’s seller’s market.

There were several times that I presented an offer for my clients where we competed with one to five other offers. And during those times, I saw buying a home in calgaryafterwords, that the property sold for 10-15% (or $40,000 to $80,000) over asking price.

When sitting down with my clients, before seeing homes, I go over what the market is like. In the past nearly two years we’ve been in the seller’s market and the likelihood of going into competition for a property is pretty good. So here’s a few things I tell my clients to prepare for if we do go into competition:

  1. Know what the market value of the property is before putting in the offer. This way you can decide before hand how high you’re willing to go if you need to compete.
  2. Realize that not every area in Calgary will have crazy competition. I’ve submitted offers under asking price, while in competition, and my client’s offer was accepted. Have your agent educate you on the areas you’re interested in.
  3. If you’ve lost in competition before, discard that feeling, “I don’t want to lose again and will do whatever it takes to win the next one”. I represented buyers where we lost in competition five times!! The sixth house we put an offer on didn’t go into competition and they got it for just under market value. It just so happened that we viewed the home when it was over priced, and then put in an offer below market value. The lucky thing was, just before submitting the offer the seller reduced their price, so we got the offer accepted before others came in. Yay!
  4. This is the hardest thing to do. Don’t become attached to the home until after your offer is accepted and you’ve cleared all conditions. This is where the emotions can cloud your judgement (I can hear my mom saying those words… and she’s right)
  5. Check the list you made up of what you must have in your home and make sure they’re met. Nothing’s worse than getting caught up in the excitement of winning in competition that you forgot to check if there is enough storage for your linens.
  6. In order to win in competition, buyers have eliminated all conditions and submitted a “clean offer”. This is a huge risk! If you don’t have more than 20% to put down at closing don’t remove the finance condition. If it’s an older home and you’re not skilled in home renovations then don’t remove the property inspection condition. I’m sure your lender will agree.

Last thing to remember when submitting an offer (in competition or not), always be willing to walk away from the table when things get unreasonable. It’s the greatest power you can have.

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