In an active real estate market, buyers may encounter competition from other buyers interested in the same property. What makes your offer stand out can be the difference between having your offer accepted and walking away empty handed. Discussed below are three strategies that can be implemented together or independently to help you win.
Strategy 1: Up Your Offer Price
If you are in a competitive bid situation, increasing your offer price may make your offer more attractive. However, this shouldn’t be taken lightly. Your offer price should not financially overextend you and be based on fundamentals, including the number of competing offers, the subject clauses you’re including in your offer, and the history of recent comparable sales, which your Realtor should be providing to you. Your Realtor can advise you on the most appropriate course of action.
Strategy 2: Increase Your Deposit
Considered “good faith money”, your deposit shows your seriousness. If you were to back out of the agreement after subject removal, you could forfeit your deposit. Therefore, a larger the deposit is more attractive to the seller, but riskier to you, the buyer. Ask your Realtor on what they would recommend in this situation.
Strategy 3: Reduce Your Subject Clauses
Subject clauses are conditions that you include in your offer, which must be satisfied through due diligence before you will move forward with purchasing the property. They are there to protect you. However, in an active market, you may consider reducing the number of subject clauses you include and do your due diligence before making an offer. The amount of time you have before offers are accepted may dictate how many subjects you can eliminate. Again, your Realtor will provide you invaluable insight on how to best navigate these complexities.
I. Financing
If you require financing, get a mortgage pre-approval before you start your home search. This should be done regardless of whether you’re in a competitive bid situation. If you find a property you like you’ll want to move quickly and being pre-approved will remove a big step in the process and make your offer more attractive.
II. Home Inspection
If you’re seriously interested in making an offer, have a home inspection completed and ensure your satisfied with it before making the offer. Keep in mind that property inspectors are in high demand so be sure that you have one lined up for when the time comes. If you need a referral, your Realtor can likely offer a recommendation.
III. Property Disclosure Statement
When sellers list their property, they are required to disclose all relevant facts about the property, including any latent material defects, which may not be apparent through an inspection. Obtain a copy of the Property Disclosure Statement and have any questions answered to your satisfaction before making an offer on the property.
IV. Title Search
A property title search is a critical step in the property-buying process. Besides determining who truly owns the property, a title search identifies any charges or encumbrances i.e. any claims against the property by a party that is not the owner. Title defects can result in complicated and costly issues for the buyer.
V. Strata Documentation (if applicable)
If the property you’re interested in is a Strata unit, request and review the Stata documents before you make an offer. The Strata documents will confirm the location and number of parking stalls and storage lockers, and the maintenance fees associated with the Strata Lot. Be sure that you are satisfied with the Strata Corporation’s finances and maintenance records, making note of the results of any Depreciation or Engineering Reports, meeting minutes, and ensuring that there aren’t any pending levies that may impact you. Finally, ensure that the rules and bylaws suit your lifestyle needs – pet, age, and rental restrictions are common, amongst many other bylaws that may exist.
VI. Subject-free Offers
If you have done your due diligence and are fully satisfied with your financing arrangements, home inspection, Property Disclosure Statement, title search, and Strata documents (if applicable) and assuming you don’t have any other concerns, you may be in a position to make a Subject-free Offer. It is important to understand that although you’ve done your due diligence, making a subject-free offer can be risky as you have no way to back out of the agreement should you later discover deficiencies in the property or learn that your financing falls through.
The Bottom Line
Real estate transactions are inherently complicated, expensive, and fraught with risk. Speaking with a Real Estate Professional is key to mitigating your risk and ensuring that your transaction goes smoothly and you receive maximum value from your transaction. If you have any questions or need some real estate help, please contact Glen Oaks at 236-888-6060 (local within BC) or at glen@caseyarchibald.com.
