What if you find a condo in the London Ontario Real Estate market that you adore, but it is also adored by someone else? It happens more frequently than you might think. In fact, there are more buyers than suitable condos in many urban areas, particularly in the London Ontario Real Estate market. That's great for sellers, but not so much for you – especially if this is your first condo purchase.
If you find yourself in this situation in London Ontario real estate, you will almost always be asked to make an offer in competition with the other people who want to buy the property. This is referred to as a multiple offer situation. It can be stressful, and you may be tempted to bid more than you can afford in the heat of the moment. So here are seven strategies for overcoming the winner's curse in a multiple offer situation.
Keep Your Cool with London Ontario Real Estate
While you may need to act quickly, you do not have to act rashly. Before making an offer on that London Ontario real estate property, take a few deep breaths. Remind yourself of your price ceiling: the most you can pay based on your income and savings while still living comfortably. Even if you really want the place, don't go above that amount. Ascertain that you have had a thorough discussion with your mortgage lender and real estate agent.
Examine comparable condos in the London Ontario real estate market as well. Make sure that whatever you end up offering is in line with what's going on around you. If people are outbidding the list price, you will almost certainly have to do the same. Determine how much it is worth to you to own this condo in this neighbourhood. Make an appropriate offer.
Present with Strong Financials
You've already been pre-approved for a mortgage. You have a consistent job. You are putting down at least 20%. When buying London Ontario real estate, you should aim to meet these fundamentals. Make sure the seller is aware of this; the seller will be looking for someone who is financially stable and can close the deal quickly.
However, if you are competing against a bidder who can pay all cash, you may find yourself in trouble because an all cash offer is even more secure (from the seller's perspective) than a buyer with strong financials.
Additionally, if at all possible, go with a local lender. Often, the seller's agent will have previous success working with him or her, which gives the seller confidence that the deal will be completed. If the bidding is particularly competitive, be willing to have your agent discuss your financial strength with the sellers to prove your case, and the client will have no trouble getting the loan or closing the London Ontario real estate. It can mean the difference between life and death.
Build a Strong Team
In the same way that you should hire a good lender, you should also hire a reputable and well-respected inspector and an experienced lawyer. And, of course, you should have a good, local London Ontario real estate agent working for you. When you make your offer, you want the seller to see that you have an experienced, knowledgeable team on your side who will see the deal through.
Consider Taking As-Is
You'd still conduct a home inspection, but only for deal-breaker issues like a major roof repair or a sinking foundation. After the inspection, you cannot renegotiate the purchase price; you must either pay the full price or walk away (if there are major issues). This gives the seller confidence that the offer you make will be accepted. And you'd still have a backup plan if something went horribly wrong with the place. Because you're in a multiple offer situation, you wouldn't have had much wiggle room to negotiate over these minor details anyway. When purchasing that London Ontario real estate property, just make sure to budget a little extra to fix any minor issues yourself.
Increase the Deposit
When you make an offer and it is accepted, you will be asked to put down a percentage or a fixed amount of the purchase price as a deposit as a sign of good faith (deposit). If you back out of the deal, the seller will receive your deposit. If the offer is accepted, the amount will be applied to the sale price.
Typically, the deposit amount is small. It ranges between 5,000 and 10,000 in the London, Ontario real estate market. If you agree to raise it, you'll show the seller that you're serious about closing the deal – though you'll also be putting more money at risk. (Please keep in mind that if the deal falls through due to contingencies, your deposit money will be returned to you.)
Determine what is important to the seller. Is it necessary for the seller to have the closing date pushed back so that the children can finish the year at the same school? Or does the seller want the date pushed up due to a new job in a new city and the need to relocate as soon as possible? What if the seller wants to rent the property back from you for two months after the closing while they look for a new home? It will often put you ahead if you are willing to meet the seller's needs.
Write a Cover Letter
At RE/MAX, we've discovered that personalizing the experience is one way to add value to an offer. We can assist you in writing a cover letter in which you introduce yourself, explain why you like the location, and tell the seller how much it would mean to you if you got it. It's a way to put a face to your offer; if you and the seller click, you might get the place even if your offer isn't the best.
In a multiple offer situation, you want to highlight your strengths, appeal to the seller, and stay within your budget. These strategies will assist you in doing all of these things – and putting your best foot forward.
Looking for London Ontario Real Estate? Search MLS listings today to find you next dream home. Contact Realtown,Yasir Khan, Sales Representative at RE/MAX.