Buying residential real estate can be an adventure, and it is usually one of the most significant purchases a person can make in their lifetimes.
This is true whether the building in question is a first home, an investment property, retirement real real estate, or any variety of the amazing houses for sale in Calgary. But finding the perfect house doesn’t happen overnight, and it’s not always easy to find the perfect fit while still remaining within your budget.
However, even if you think you’ve found the perfect Calgary home, there’s no guarantee that you’ll be able to buy the property you want - particularly if you find yourself facing off against another investor in a bidding war.
If you’re worried about finding yourself locked in battle for a property, read on below to learn more about bidding wars, and what strategies may help you defeat your opponent and end up living at the address of your dreams.
When Does a Bidding War Usually Occur?
A real estate bidding war is more likely to occur when the housing market is hot, the number of available properties is low, and prices are high.
These elements combined create what is termed a “seller’s market,” where many of the advantages are held by those selling the homes, and the pressure is on buyers to compete, which leads to higher prices.
Because of the economic aftershocks of the COVID-19 virus are still reverberating, the overall economy (including the Calgary housing market) is expected to experience a decline in 2020 and 2021. Housing prices will likely drop, with some analysis predicting price reductions of between 10 and 20 percent.
In the context of the Calgary housing market, this is good news for buyers. At the moment, the economic outlook is not conducive to an environment ripe for real estate bidding wars. That said, as COVID restrictions loosen, the economy could be poised for a rebound in the medium term.
The Three Key Strategies of Winning a Bidding War
There are three fundamental actions you should take to put yourself in a good position to win a bidding war.
Provide a Great Offer
First impressions count, and although it may sound obvious, leading with a great offer (one above asking price) is a good way to introduce yourself. There are also other mechanisms you can include with your offer, such as an escalation clause.
These clauses are written into the buyer’s offer, promising to automatically raise their offer by a certain amount over the highest other bidder. Escalation clauses typically also have a cap, so that the buyer is not on the hook above and beyond a certain make-or-break price point.
While it’s hard to believe at first glance, sellers don’t necessarily always choose to do business with the prospective buyers that made the highest offer. Other factors can also be important, such as flexibility with the move-in date, an ability to perform some of the pre-sale repairs the seller initially agreed to, or other conditions that make the seller’s life easier.
It can pay off to find out more about the sellers and their priorities so that you can adjust your strategy to accommodate them in ways they find most convenient. A good real estate agent can help you do that.
Pre-Approved Buyers Trump Pre-Qualified Buyers
Getting pre-approved for a loan by a mortgage lender doesn’t just give the seller confidence that the transaction will go through, it also helps the buyer.
Mortgage pre-approval is valuable because it can help determine the limits of your own budget, allow for better planning by calculating estimated mortgage payments in advance, and can even lock in an interest rate for the duration of the sale process, which can extend up to 120 days, depending on the lender.
Other Tips and Tricks
The old expression “the early bird gets the worm” is apt here. Sometimes the best thing you can do to win a bidding war is to get there first. By being informed of a new house on the market, seeing it within 24 hours of its listing, and then providing a clean, well-priced offer, you can create the right conditions for a sale.
Besides focusing on the fundamentals and the numbers, some realtors recommend using a more personal approach to connect with sellers. Because in many cases a seller has been living in their house for many years prior to the sale, reaching them on an emotional level can help your bid stand out.
Consider writing a letter or email that conveys why the house is so special to you, and how it would positively impact your life. If you can tug on the heartstrings of the seller, the two of you might be able to make some beautiful music together.
Finally, finding the right Calgary real estate agent is also important. Having an experienced team at your side is a huge help by not only pointing you in the right direction, but also by taking the time to get to know your specific situation and goals, educating you on all of your options based on that knowledge, and helping you negotiate in a way that prioritizes your needs.
Get Started Today with Real Estate Partners
To learn more about the hottest Calgary communities, contact one of the experienced agents at Real Estate Partners today. They put clients first, guide you in a responsible manner, negotiate the best prices on your behalf, and will find a way to put you in the home of your dreams in no time at all.