7 Steps to Win a Bidding War in the Winnipeg Market (Without Over-Bidding)
November 3, 2022
There's nothing more frustrating than finding the home of your dreams and losing it to another buyer! Learn how to win a bidding war in a seller's market by following these simple 7 steps and increase your chances of securing the home of your dreams.
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 environment is commonly referred to as a seller's market or hot market, meaning more people are looking to buy homes than there are homes for sale.
House hunting in a seller's market can be stressful for home buyers as bidding wars become more common, but there are things you can do to help increase the chances of securing your home.
There were 1,797 sales, 3% higher than the five-year average, though 7% under June 2021.
The average price for all sales was $426,000.
While we still remain in a seller's market, 54% of houses sold above list price in June, compared to 64% and 67% in April and May, respectively.
But don't panic – there are things you can do to help your offer stand out, increasing the chance that the seller will accept it.
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 seven steps to improve your chances of winning a bidding war:
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). Doing this is important, so you don't overstretch your budget with your mortgage payments and other household expenses.
Cambrian's Mortgage Affordability Calculator can help you estimate how much home you can afford to buy. Take two minutes to complete our Cambrian Mortgage Affordability Calculator, today! Using our calculator will not affect your credit rating.
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.
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 the possession date is flexible, indicating that "this shows that the buyer is flexible and easy to work with."
The more you can align your offer with what the seller is looking for, the better the chances they may accept it, even if it is not the highest offer.
Make a Large Deposit
When 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 may 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 favourably.
Once the sellers accept your offer, they will hold the deposit until the sale is finalized. The deposit goes towards the price of your home. Speak to your realtor and read the Agreement of Purchase and Sale carefully to understand the conditions for refunding your deposit should the sale not go through for reasons on the part of the seller or the buyer.
Consider Writing a Letter
If you've fallen in love with a home, consider writing a letter to include with your offer. The letter should talk about what the house means to you. For example, 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 over other buyers.
Do your Home Inspection before Making an Offer
Getting a home inspection can save you a lot of money in the long run if the home inspector discovers a major issue with the home. It's also worthwhile to understand what repairs you should be budgeting for should you purchase the home.
However, 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 before 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.
House hunting can be a stressful and emotional time. If you've been searching for a home for a while, chances are you've lost a few homes in the process.
To avoid overbidding, ensure you understand the typical price per square foot of similar homes in the area and quantify the value each unique feature 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 Winnipeg or Selkirk.
Happy house hunting!
*All rates and yields subject to change without notice.