How to WIN a house when in Multiple Offers in 2022

Knowing how much to pay for a home in a multiple offer situation is like figuring out when to take off your winter tires in Calgary.

Many frustrated buyers share stories about writing so many offers and not getting the home they want because of the lack of strategy.

Sellers’ Market

If you are buying a home in Calgary right now, there is a big chance that you will encounter a multiple offer scenario. The first thing you need to understand is that, when you are in a multiple offer situation, you are in a seller’s market.

The best way to win in a seller’s market is by playing their game! You need to look at how to reduce the seller's risk. This might not seem fair because you are the one buying their house and spending money, but in this type of market, you might not have a choice!

There are three ways to get to the seller’s favourable decision, deposits, possessions, and conditions.

Possession

Possession is the date you set when you will take the keys from the seller, and they officially turn over the home to you.

Sellers have different situations when selling their properties. It is common to find sellers who recently bought a new house hence the need to sell the old one. There are also some who don’t want to be landlords anymore, so they are letting go of their properties.

Regardless of the situation, you need to find out the best possession date for the seller. Then, do your best to work around that schedule, even if that means you need to rent a temporary home or stay with relatives for a month. You have to do this to have the seller’s favour.

As springtime approaches, you can expect to see more multiple offers happening, so you have to be prepared with your best strategy.

Price

The next thing you have to figure out is what to offer. Sellers could choose a lesser price of an offer if it has better or no conditions, or the possession date is more beneficial for them.

Nevertheless, price is very important. You could have zero conditions, but if your offer is $50,000 lower than the top offer, your chance of winning is close to zero!

Data is key in coming up with the best move. Talk to your realtor about doing research. See how much similar properties sold in the last couple of weeks. The trick is to look broader. Do not focus on the community you are buying in but check its neighbouring communities too and get a feel of the market there. Doing this will give you a great understanding of the price that homes are getting sold for.

Looking at the active listing prices is not wise. Anyone can ask anything for their home. Prices are all over right now because some sellers are pricing really high, and some are going low and trying to get multiple offers. Due to this unprecedented market, different strategies are being tried right now, so don't look at active listings; look at the sales.

Conditions

Conditions are closely tied with deposits. Unfortunately, some people are not delivering their promised deposit as a way to get out of an offer. For example, the offer stated a $30,000 deposit would be paid in three business days. However, after three business days, no deposit was made! If you think that is fine because there is no money put down yet, that could be a big problem. Lawsuits can be filed if this happens.

Once the sale becomes firm, the buyer is legally bound to follow through with the terms they have agreed with the seller.

Healthy Deposits

Healthy deposits are anywhere from $5,000 to $15,000 for an average house for the last two years. For properties priced at a million or over, deposit ranges from $30,000 to $50,000.

You have to show the seller that you are keen to close the transaction in multiple offer situations. For example, you put down a $30,000 deposit for a $700,000 house with a four-day financing condition. That deposit can be returned if you do not remove your conditions. However, if you don't have conditions, and for some reason, you can’t close on the possession date, that deposit stays with the seller.

Home Inspections

If you are serious about getting the house you want, you should do whatever it takes to win it. One way to do this is by inviting a home inspector to the showing.

The home inspector will not be checking the water levels in the walls or anything like that during the showing. Instead, they will accompany you and look at the property as if they were the buyer. They can point out signs of possible problems to help you decide if there is a need for a home inspection to be part of the condition for an offer.

You may also ask the selling agent if they did a pre-listing inspection. More people are doing this to understand the house's condition thoroughly.

Writing Offers

When writing an offer, do not show your cards too early. Don’t be too quick to send your offer and email it at any time of the day. Inform the listing agent that you will be sending an offer but make sure you send it only about an hour before the presentation to the seller.

Your agent should know how many other offers are there and who are the other agents writing; especially if there are aggressive offers. You have to know this so you can strategize well.

Do an advanced play. Think of a way to create win-wins. Again, think of terms that will leverage the seller, like possessions or conditions, if there are any because you want them to choose you. That's the whole point of this.

If you are writing an offer just to try, but you are not 100% on it, please don’t do it! When you write an offer and lose, then do it over and over again with the same strategy, you are only inflating the values, so you are only competing against yourself.

The person who got the house you wanted may have found out how many offers there were, so they pushed their offer a few grand more. And that happens every time, so suddenly there is a $50,000 increase compared to the first one you wrote, and now these values are increasing.

Also, writing several offers and never winning can get really devastating. You will burn yourself out by doing that. You need to change your strategy.

The Winning Clause

Here is a hidden gem that we want to share with you. This is an escalation clause that has helped our clients who went through multiple offer situations:

“In the event of multiple offers, the buyer invites the seller to counter this offer at a price of ____ higher than the highest currently active offer. Not to exceed _____ dollars. The buyer will be provided with proof of the competing offer within 24 hours of acceptance of this contract with the buyer's personal information redacted. And that would be of the other offer, should this not be provided, the buyer may at their sole discretion terminate this contract upon written notice to the seller.”

Work with your agent in writing a clause like this and have a lawyer review it. Make sure you are comfortable with all the terms, and it works for you.

And here’s the final but more important thing in writing an offer. Don't get attached to the house until the seller signs your offer. It will be so hard to be emotionally attached to a home and lose it; all the more if that happens again and again. If you don’t want to go through that emotional roller coaster, book a call with us, and we will be glad to help you win and buy your dream home!