Buying a house, as we know is a very important decision for a family, the process can be stressful due to its relevance and its inherent complexity.
Let’s review one of the points that recently happens frequently and forces us to rethink the purchase strategy: Multiple Offers.
We are in a seller’s market, this means that there is a far greater demand and in a high percentage, for the same house there are several potential buyers who simultaneously present a promise to purchase, in this case the seller has the opportunity to start an auction. In order to acquire the property, the buyers find it necessary to significantly increase the price of their offer and thus try to be the winner of the auction, that is, that their promise to purchase is accepted.
How does this process happen and is it systematized?
In the Province of Québec, the general rules established by the official Real Estate Agencies provide a clear reference framework that helps in these cases; however, it is variable in each situation. Having a Bank pre-approval is essential and the advice of your real estate agent is invaluable to achieve your goal or, if applicable, define if it is no longer worth continuing in the auction.
Obviously, the price is the determining factor, but other points also count as the conditions: inspection, signature with the notary, date of occupation, as well as intangible variables such as the relationship and empathy with the sellers and the sellers’ real estate broker.
The existing regulation forces to carry out a different process than the auctions that we know in works of art and automobiles, in these auctions everyone knows the positions and offers of the buyers.
In the case of real estate, in the process it is not known how much the other buyers are offering, which is why buyers have recently been forced in these cases to offer amounts well above the price initially requested by the sellers. It is the process known as ‘blind auction’; the reason why the authorities have imposed this process is with the intention of avoiding favouritism and having a balanced process.
The experience of your real estate is essential to measure the appropriate additional amount in each case to win the auction. Your agent knows the market, the area and his abilities as a negotiator to understand the particular logic of the sellers and to know which points are the ones that most interest them. Try to punctually meet the other requirements mentioned (occupancy date, financing)
In certain parts of the Montreal metropolitan area, overbids by 50 or more fiercely competing buyers are very common, requiring you to bid several tens of thousands of dollars above the base price to win.
In other regions the auctions are a little less hard-fought, but it is common for 5 and up to 10 simultaneous offers to be presented.
This is the real estate reality we live in today. The information your agent gives you is vital to making your evaluation as informed as possible, for example, ask yourself, how would you feel if you overbid just $40,000 instead of $45,000 and lost the auction?
If the property really interests you and you don’t want to lose it, commit to offering the best possible price. If you lose it, have no remorse because you offered the price that in your opinion was the fair maximum.
Once you have carefully evaluated, taking into account the available information, decided and presented your best offer, it only remains to take a deep breath, cross your fingers and hope that your offer is chosen.
It is a process; even in the case of rejection there are valuable lessons to continue the search and find the property you are looking for.
Conclusion:
The seller wants the transaction to be quick, smooth and profitable for him. But, remember that this purchase must also be beneficial for you.
If you are interested in buying soon, I invite you to register on this page.
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