Multiple Offers: Standing Out from the CrowdSeptember 12, 2019 Tags: immobilier, Montréal, mortgage, multiple offers, promises to purchase, Real Estate, Real Estate agent
Montreal these days is a seller’s market. That means there are far more buyers on the market than there are properties. This can give rise to bidding wars for certain types of real estate.
If you’re a buyer or may be looking to buy real estate in the coming months, here are a few tips that should help you adopt the best strategy when facing down multiple offers.
What does “multiple offers” mean?
It’s what happens when a seller receives more than one offer to buy their property—usually because the price is right or the property has what people are looking for (location, condition, materials, etc.).
All of the market surveys for 2018 have shown that it was a record year for sales in Montreal and the trajectory for 2019 is much the same (see our real estate forecast for 2019). The market is running hot due to strong economic growth, consumer confidence in the economy, very low unemployment, and Montreal’s growing popularity among foreign buyers (Chinese, European, and American). In such conditions, sellers have the upper hand and buyers can find it hard to stand out from the crowd.
Tip 1: Work with the right people
It’s normal to feel a certain amount of stress as a buyer, particularly if the property you’re after receives multiple offers. If you’re working with a professional real estate agent, they will no doubt advise you to keep cool and stay within your budget. If there’s a bidding war, work out the maximum amount you’d be willing to spend on the property and stick to your guns. That way, if your offer isn’t accepted, at least you’ll know you did everything you could.
Tip 2: Get pre‑approved for your mortgage
When there are multiple promises to purchase on the table, the receiving broker has an obligation to present them in a neutral manner, according to the date received , as per the Regulation respecting brokerage requirements, professional conduct of brokers and advertising.
In such situations, you’ll never be informed of the purchase amounts or conditions of the other buyers. Under the Real Estate Brokerage Act, the selling broker must tell all the parties how many promises to purchase were received, without revealing their contents.
To show the seller you’re serious, the right strategy is to get a mortgage pre‑approval from a financial institution. That way, when the seller reads your offer, they’ll know financing won’t be an issue. To dive a little deeper into that topic, see our article on mortgage pre‑approvals.
Tip 3: Massage the other conditions
The price isn’t the only ticket in a promise to purchase. You could be flexible on the move‑in date or waive the homebuyer’s inspection—something that could pique the seller’s interest but is still very risky, especially if you’re a first‑time buyer. When in doubt, ask your real estate broker for advice.
Tip 4 : Put your best foot forward
It might surprise you, but a video, a letter, pictures, descriptions of your plans or the family you’d like to build—all this can show the seller that you’re the right buyer. After all, sellers have an emotional attachment to their home, which means they’ll want to know more about the people looking to move into it.
Tip 5: Improve your offer or put in a second position offer
If you know that you’re competing with other buyers and the seller hasn’t accepted or rejected your promise to purchase yet, you can improve your offer to try to sway the seller, by raising the price or relaxing your conditions, for example. For that, your broker will have you fill out an enhancements prior to acceptance (EA) form.
If the seller decides to go with someone else’s promise to purchase, you can ask your broker to submit a second position offer. That way, if the conditions for the chosen offer aren’t met (for example if the seller fails to secure financing or the offer is withdrawn after the homebuyer’s inspection), you’ll have a second chance to buy the property. A word of caution: you won’t have the right to make offers on other properties in the interim.
In closing, the best advice we can give you in a situation where there are multiple offers is to be patient, keep calm, and bring any concerns or questions you may have to your broker. Since every case is different, your broker will be in the best position to assess the situation with you and decide on the strategies most likely to get your offer accepted.
If you’re unsure or aren’t working with an agent or broker, OACIQ (Organisme d’autoréglementation du courtage immobilier du Québec) is there to protect and assist home buyers and sellers and make sure any brokers involved are acting in accordance with the law.