Multiple Offers Also Known as Bidding Wars Explained

So you've found the perfect home or condo, and it's even below your budget. You decide that you want to submit an offer on it, only to find out that you can't until a certain date! 

In a strong market, where the demand for inventory of listings exceeds the available supply, we refer to this as a seller's market. In a seller's market, generally the seller's have the upper hand and when listing their property (especially in good neighbourhoods where there is low inventory to start with!). Often, when listing their properties on the MLS system, Realtors will list a property on the public MLS site a little (or a lot!) under the current market value and open the property to showings for a period of usually one week until the offer presentation date / and time.

In the specified time frame prior to offer presentation date,  agents will try to expose the property to the greatest amount of people, often conducting public and agent's open houses. 

What this means is that at the seller's request, they will not entertain any offers until the specified date and time.

Once you decide that you will proceed into a multiple offer situation, and you have signed the "Agreement of Purchase and Sale" with your realtor, they will register the offer on the listing brokerage's system. What this means is that once an offer is registered on the listing brokerage's system, they will need to notify any agents that are booking any future appointments or registering any other offers of the status and number of registered offers.

So the offer presentation date comes. What happens next?

First offers will (often) need to be registered by a certain time (usually about 2 hours prior to the start of the review). The reason for this is so that all parties that will be participating in the multiple offer can assess their offer and make a game plan of how they wish to proceed based on the number of offers.

**Often, even though is a cut-off point to register the offers in order to be considered for the offer presentation, often there is an agent that will register an offer after the requested time, or even after offers have started.** Technically, it is at the agent's and seller's discretion whether to decide whether to entertain the offer, however, a seller is looking out for their best interest so the reality is that they will still review the offer.

Depending on the number of offers, often the listing agent will send all offers back to see if any potential buyers want to improve their offers. Buyer and their agents never know any information about the other offers so in a way you are submit a blind bid.

If you love the property, and are serious about winning a multiple offer, here are 3 factors to consider:

1) be able (and willing) to submit a firm offer without ANY conditions (such as conditional on financing, home inspection, status certificate). What this means is check with your mortgage broker ahead of time to see if they feel comfortable with you going without a financing clause. Also, bringing a deposit 'herewith' also doesn't hurt (as opposed to upon acceptance which is within 24 hours).

2) Be able and willing to go above the asking price. Even though your realtor can show you of what comparable units sold for in the past, at the end of the day you decide what is your final price that you want to submit at.

3) Figure out what your "NO REGRETS" offer is. Depending how many competing offers there are, I will often draft a couple different offers/ prices for different scenarios. However, when push comes to shove, and the listing agent comes back and says give me the best you can do- be ready to submit your NO REGRETS offer- which I say is a price that you will be okay with if the next guy outbids you by $100. This is the price that you will be happy to pay, and will not result in you being devastated if you lose.

If you are a buyer looking to buy a new property, or a seller looking to place your home up for sale, and have any questions- just give me a shout.