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Buyers warned about bidding wars

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Guest | 05 Mar 2014, 06:53 AM Agree 0

Know your limit and stick to it. That is the stark warning from a leading bank as they say more Canadians are fighting it out in bidding wars to secure prime properties.
"The competition for real estate in Canada, particularly in hotter markets, can be fierce, however it's important that buyers avoid getting caught up in the moment and respect the budget parameters they've established," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal.
According to the bank, 34 per cent of Canadians are willing to enter a bidding war, an increase of six points compared to one year ago. With limited stock of single-family homes in urban cities, this scenario is naturally more prevalent in Toronto and Vancouver.
Homeowners say they visit an average of 9.5 homes before buying, while half of the survey respondents say they were successful on their first bid.  Provincially, prospective buyers in the Prairies and British Columbia are the most willing to compete on the price of a home.
"For those willing to negotiate on the price of a home, the most important part of preparing is ensuring they get pre-approved by their bank so they know exactly what their limits are and can stick within them,” advises Parsons.Many buyers say they believe bidding wars are triggered by sellers who deliberately price their homes below market, with those on the Prairies and in Toronto the most likely to use this selling strategy.
  • Robert Harrington | 10 Mar 2014, 03:58 PM Agree 0
    Well this is easy. Buyers can win every bidding war WITHOUT over paying by simply using standard "SUBJECT TO INSPECTION" terms printed out in every Purchase and Sale contract.
    After getting your offer accepted and after the home inspection has been done, grind the price back down to what you want to pay because of all the deficiencies your inspector finds in the building.
    Too Easy. Do not expect your BUYER's agent to help you on this one because an agent's duty is to his/her commission and agents are usually afraid to lose their commission more than helping their client.
    However, the SELLER's agent, acting in his/her own commission self interest will definitely help you grind the price down.
  • Trevor | 12 Mar 2014, 03:07 AM Agree 0
    Robert, that is some of the worst advice I've ever heard. I'd actually love for you to try pulling that one a multiple offer property that is listed with me and see what happens.

    See, what you fail to realize is that on a hot property we usually are able to get backup offers in place ready to step in and swipe the property from the initial buyer if they were to try playing games like you suggest. The second you ask the seller to make concessions on the price or any other term, you're effectively making a counter offer. Once a counter offer is placed, the seller is back in control and can completely reject your offer all together. The seller then moves to the backup offer #1 and says "want it? Remove subjects today". if they don't remove subjects, seller goes to backup offer #2...and so on.

    On a hot property, don't mess around with renegotiating the deal unless you're willing to LOSE THE DEAL. I've seen Realtors lose deals for their buyers by trying this stunt, and they just end up looking like real idiots in front of their client when it happens.

    Furthermore, Realtors are bound to work in the best interest of the CLIENT and not work with their own remuneration in mind. Remuneration has no connection with duty. If you don't believe me, go ask the real estate council and see for yourself. Any agent caught looking out for HIS INTEREST over the CLIENT INTEREST will get a very big spanking from council, with likely fines involved and possible suspension of license.

    Know your facts before offering up such irresponsible advice.
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