Canada's Condominium Magazine
Bidding wars have broken out over the past several months as homes around the province have become few and far between, reaching what realtors describe as “historic low levels.” Housing prices have continued to increase despite a decline in sales. Kitchener-Waterloo Association of Realtors president Tony Schmidt noted that the region continues to see multiple offers on properties, which results in inflated prices.
The average sales price in January rose nine percent for all residential properties compared to a year earlier. Tougher mortgage rules were noted as contributing factors in the latest trends. “The reality,” said Schmidt, “is we’re still experiencing more demand than supply right now.”
Waterloo has not been the only region to engage in bidding wars, however. Residents across Ontario have admitted that they would participate if necessary to purchase a home. Although prices can quickly skyrocket beyond what one would typically hope to spend, they can still remain significantly lower than current market averages.
While most people try to avoid such situations, bidding wars become inevitable for many Canadians who have exhausted all other options. If you find yourself in this position, it can be stressful. Realtors, mortgage providers, and other realty and loan experts have provided valuable tips for people who engage in bidding wars.
Your First Move Should Be to Obtain Financing
Buyers must have financing in order prior to participating in auctions. Many people have mistakenly relied on pre-qualification letters and information obtained from the internet without solidifying a loan, only to learn that they missed some fine print or that their credit scores did not meet the minimum requirements for approval. Many auctions also require proof of financing prior to bidding to ensure that the property does not go to someone who cannot afford it.
Have the Property Appraised
Many people are willing to pay top dollar to win the home of their dreams. However, things can go downhill if the home ends up falling short of expectations. Have a property appraised to ensure that you are not way overbidding. It is better to move on to a new property than go into debt for a property that is not worth the price. Additionally, many banks will only grant the buyer 80 per cent of the value of the home. If your home is valued at $750,000 but you bid $1.5 million, you could find yourself on the hook for $900,000.
Do Not Get Overly Attached
Becoming too attached to a property can make it difficult to remain in control of decisions and finances. While it is great to find a home that you love, becoming overly attached before closing the deal can lead to poor decision making. You should never bid more than you are willing and able to pay, which can become difficult for people who feel like their dream home is slipping away.
Do Not Take It Personally
Bidding wars can be overwhelming, and it can seem like you are getting nowhere when you lose property after property. It is easy to get caught up in the process and experience frustration over yet another loss. However, it is important to remember that it is much better to let a property go than to overbid just to make sure you win. Keep calm and do not put so much pressure on yourself, or you risk making irrational decisions. You will eventually find the right property for the right price.