7 Tips to Win a Bidding War on a Home (Without Over-Bidding)

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In our current competitive environment, Winnipeg and Selkirk’s housing prices are creeping up, and it is common for homes – especially starter homes - to be sold for well over the asking price. This can be stressful for home buyers as bidding wars become more common.

But don’t panic – there are things you can do to help your offer stand out, increasing the chance that it will be accepted by the seller.

How do I Win a Bidding War?

Jeannie Sasley, a Realtor in Selkirk says that to win a bidding war, you need the following: mortgage pre-approval letter, a large deposit when making your offer, and no conditions or very limited conditions.

Follow the following 7 steps to improve your chances of winning a bidding war:

  1. Know what you can Afford

    Before house hunting, take a good, hard look at your finances and prepare a monthly budget you can comfortably afford, including the new expenses associated with owning a home (property taxes, utilities, mortgage payments and ongoing maintenance of the home). It’s important to do this so you don’t become overstretched by your mortgage payments and other household expenses.

    Cambrian’s Home Affordability Calculator can help you estimate how much home you can afford to buy. Take two minutes to complete our Cambrian Home Affordability Calculator. Using our calculator will not affect your credit rating.

  2. Get Pre-Approved for a Mortgage

    “It is extremely important for a client to be pre-approved for a mortgage by their financial institution before house hunting,” Sasley says.

    Getting pre-approved for a mortgage establishes you as a serious home buyer, tells you exactly how much home you can afford and allows you to move quickly when a house you want comes on the market.

    At Cambrian Credit Union, for a limited time, get pre-approved for a mortgage and we’ll take 10 points off our posted 3, 4 or 5-year fixed rate mortgage. That equals to thousands of dollars of savings. And, even better: we’ll hold that rate for you 120 days, giving you time to find the house of your dreams.

  3. Be Flexible with the Possession Date

    Another thing Sasley always suggests is to give the seller the possession date that they want. She also suggests noting in the offer that there is flexibility on the possession date, indicating, that “this shows that the buyer is flexible and easy to work with.”

    The more the offer is aligned with what the seller is looking for, the better the chances that it may get accepted, even if it is not the highest offer.

  4. Make a Large Deposit

    When you are making an offer, a deposit is included as part of the offer. So what is a deposit? A deposit shows the seller that you are serious about the home and that your financial situation is stable. In a hot market, you my want to include a large deposit as part of your offer – at least $10,000 or 5% of the purchase price – to position your offer more favorably.

    Once your offer is accepted, the deposit will be held in trust until the sale goes through, at which time it will go towards your down payment on the home. Speak to your realtor and read the Agreement of Purchase and Sale carefully to understand the conditions for the refund of your deposit should the sale not go through for reasons on the part of the seller or the buyer.

  5. Consider Writing a Letter

    If you’ve fallen in love with a home, consider writing a letter to include along with your offer, talking about what the house means to you. Is this the community you’re hoping to raise a family in? Or are you looking to make this your very first home? Some sellers may want their family home to go to another family who would appreciate it the way they have, so a letter may give your offer an edge.

  6. Do your Home Inspection before Making an Offer

    Getting a home inspection can save you a lot of money in the end should the home inspector discover a major issue with the home. It’s also worthwhile to understand what repairs you should be budgeting for in the near future should you purchase the home. But in a hot market, including it as a condition of the offer can be enough to take your offer out of the running. Sasley suggests doing the home inspection prior to writing an offer and not making it a condition.

    If this is not possible, keep the home inspection time frame short so the seller can move on quickly if you are not going to move forward with the purchase. This means selecting your home inspector before starting to house hunt so they are available at short notice.

  7. Be Patient
  8. House hunting can be a stressful and emotional time. If you’ve been on the search for awhile, chances are you’ve lost a few homes in the process, and might be tempted to over-bid on a home out of desperation.

    To avoid overbidding, ensure you understand the typical price per square foot of similar homes in the area and quantify the value that each unique feature of the home holds for you. Then put together an offer that reflects that value.

    Although it may feel like a long process, Sasley encourages house hunters to “stay with their realtor, stay focused on what you can afford, and you will get a home”.

For more tips for house hunting tips, explore our Guides to Buying a Home in either Winnipeg or Selkirk.

Happy house hunting!

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