Answers To Frequently Asked Questions
The real estate market in central Ontario has become extremely competitive with multiple offer situations becoming much more prevalent. With help from an article written by Mark Weisleder and additional insight from my personal experience let’s go over some of the common questions regarding the bidding war.
What does “holding back offers” mean?
A listing real estate agent may try to create a multiple offer situation by pricing a property slightly below market value and stating in the listing that the Seller will not review any offers until 5 to 7 days later. This strategy allows all potential buyers the opportunity to see the property while trying to generate as much interest for a hot property. The one benefit to Buyers is that this affords you the opportunity to conduct a home inspection before the offer is made with the thought of removing that condition in your offer which will be more attractive to the Seller.
If the Seller is Holding Back offers till next week, can I still submit a bid today?
The answer to this question is “Yes”. This is referred to as a bully offer and the listing agent is ethically bound to inform their client about any offer that has been received. If the Seller ended up changing their mind and chose to consider your offer, the listing agent would update the status to “offers are now being considered”. The worst thing that can happen when submitting a bully offer is that the Seller says they will not consider, and you must wait until the offer date arrives.
What does a listing agent have to tell all of the bidders?
A listing agent must tell everyone involved how many offers have been received and if any of the offers are from their own office, which could contain a commission discount. An agent cannot disclose the price of any offer.
Can I make an offer that states that I will pay $5,000 more than the best offer received?
This is not allowed and is referred to as an escalation clause. By accepting an offer with an escalation clause the listing agent would have to disclose the price that someone else bid, which is not allowed.
Can I make an offer with no price and ask the Seller to just “fill it in”?
First off, this is not something you should ever consider. Imagine if the Seller wrote in a price $100,000 above the value of the property. What then? Also this is not a valid offer as the price was not included and would most likely be considered void.
How should I prepare for a bidding war?
The best preparation is to use an experienced real estate agent who has had previous success in a multiple offer scenario. You want an agent who will tell you what the home is worth so you can bid a price that you are comfortable with and will not regret later.
Personally, I have been involved with numerous multiple offers and have managed to guide my clients through the process with a great success rate.
Thank you to Mark Weisleder for a great article. For more information on his law practice visit, www.markweisleder.com.