Initial Considerations: We are breaking down what is the Art of Bidding War in Real Estate.
Bidding War in real estate is when more than one buyer competes in purchasing the same property from the seller and results in multiple offers.
The price is not the only factor that entices sellers from accepting an offer but could be the main reason why buyers will try to out-bid each other.
Seller’s Dream and Buyer’s Nightmare in Real Estate
A seller’s dream is when they receive multiple offers are a dream opportunity for sellers and their agents. Since the seller does not have to accept the first offer, the buyers compete in the bidding war to purchase the property with the most attractive offer. It results in offers being above the asking price or conditions favouring the seller.
For example, the seller lists the property for $500,000. The seller’s agent receives multiple offers and ends up accepting an offer for $550,000, which is $50,000 above the asking price.
A buyer’s nightmare is when the buyer can often mistakenly offer more than what they planned to spend to beat competitors. It hurts buyers who make an offer above the asking price, then deposits money and finds out that they cannot raise enough funds to close the deal.
These buyers experience financial stress by losing their deposit or paying higher than the property’s fair market value.
Our Tips for Buyers in Bidding Wars
If you are purchasing a property, make sure to consult with a trusted mortgage advisor who can assess your financial position and figure out how much you can afford. Also, make sure to inform your real estate representative about your financial circumstance before entering the bidding war. Remember, you should seek real estate professionals that you can trust so they can help you perfect the art of bidding war in real estate.
About TR Law Firm
If you need any real estate consultation, TR Law Firm will help our clients prepare all documents and legal work to ensure you have a smooth real estate experience. Please contact us to set a virtual chat with our experienced lawyers or feel free to call us at (905) 463-2088 or email at info@pmlawyers.ca.
