How to put together the best bid for a home
Buying your first home can be a daunting prospect. All the news coverage we see about hot housing markets, bidding wars, and record sales prices is enough to intimidate even the most experienced buyers.
When I set out to buy my first home, I had so many questions. How do I know what a home is worth? How do I make my offer more competitive? How do I put my best foot forward and avoid making a big financial mistake?
Through working with a trusted real estate agent to losing out on many bids over several months, I learned so much about how to navigate a hot market and a competitive bidding situation without losing my cool (or my retirement savings!) in the process.
CHECK COMPARABLE SALES IN THE AREA
If you’re working with an agent to find a home, they can help you out by doing some research on recent sales in the neighbourhood that are comparable to the kind of place you’re interested in. This will give you an idea of what kind of number the seller is expecting and what ballpark other bids might come in at.
In a competitive housing market, you’ll need to place a bid that’s strong enough to get a call back from the seller telling you you’re in the running. The closest you can land to the top handful of bids without breaking your budget the better.
KEEP A PULSE ON INCOMING BIDS
Keeping a pulse on how incoming bids in the lead up to the deadline will tell you how competitive you may need to be in the bidding process. If there are no other bids or just one or two, you may be able to submit a lower offer and still be in the running. If there are three or more you should go in with your best number.
FIND OTHER WAYS TO MAKE YOUR BID ATTRACTIVE
There’s no doubt that the main and often ultimate deciding factor for a seller is whether or not you put in the highest bid. Occasionally, though, you may come neck and neck with someone else, or there may be other reasons a seller may choose the second-highest bid instead.
You can make your bid more attractive in a number of ways. Offering a flexible closing date can be a boon for those sellers who need to move quickly or those who need a longer time to move. Offering a larger deposit can tip the scales in your favour when all else is equal, too. Sometimes even a personal note can give you a competitive edge as well, especially when the seller has a strong personal connection to their home.
DECIDE YOUR BIDDING STRATEGY AND STICK TO IT
One of the most important things I’ve learned is to know your bidding limit and make a plan with your agent for how to stick to it under pressure.
If you get a call back to say you’re in the running and the seller would like you to put forward your final offer, it can be tempting to bid more than you should to avoid losing out when you’re so close. I’ve felt this feeling on several occasions. This is where working with a level-headed agent really has value. They can help you form a bidding strategy before you enter the process and keep you accountable to it when emotions start running high.
In the end, I won a bid on a house I am truly happy with, and one I can afford in the long run. I didn’t get flustered, I didn’t overbid, and I ended up making a financial decision I feel comfortable with and leaves me confident about the future.
