Here are some tips and tricks on how to win an offer on your dream house. Being a realtor in Toronto for over 25 years, I know how frustrating it can be when you are bidding against 15 or even more interested buyers. Of course these tips don't guarantee you success, but they could help you to avoid costly mistakes.
If you don't get prequalified, you will be in a much worse position as opposed to someone who has proper financing in place. Don’t leave the seller in doubt about your financing. Without this, all the following tips are useless.
Get to know what or who the seller wants
Knowing what or who the seller is looking for is essential, because you don’t want to waste your time with a seller that has terms which you cannot meet. It is therefore advised to find out all the requirements accompanying the sale of a property you want to bid on. If you cannot agree with them, walk away. On the other hand, if you are willing to meet them, have your agent prepare a summary that will accompany your offer. That will give you a chance to let the seller get to know you a bit and will highlight the positive aspects of your offer.
No low-ball, no even cut off marks
The last thing you want to do is to offend the seller by your low-ball offer, because the seller most likely will rather sell it to almost anybody other than you. And that's even if you deliver a comparative offer in a later stage. What you want to do is to shoot about $1,800 to $4,800 higher over the highest expected bid. Let's say the highest bid is thought to be $470,000. Round it up to $473,164 - don’t limit yourself to an even number!
A nice large down payment of 10% to 20% always makes a good impression. Of course in most cases you can try to renegotiate the final amount of your down payment with the seller after the contract has been secured and usually with a successful outcome. What really matters is the money at the table when you close so that your contract makes a good impression.
Good faith deposit
The next technique is quite aggressive but has some great results. Put as much of your down payment into your good faith deposit as you can (you lose this deposit if you break the contract). Since the good faith deposit money is a part of your down payment anyway, it makes no difference to you, but makes a great impression on the buyer. That way the seller knows you are for real. Since the down payment is easily renegotiable after the deal has been closed, the good faith deposit is what really shows how much you want that property.
Offer free post-occupancy
In the summary accompanying your offer, propose a free-post occupancy agreement to the seller in case they need a week or two in the property after it's been sold. Normally you would negotiate rent, but giving the option of free occupancy for a short period of time might be the detail that will decide whether the seller will go for your offer or not.