Bidding Wars

Bidding Wars

Bidding Wars - people hate losing them, people hate winning them. 

Buyers hate them, Sellers love them. 

There's something unsettling about being in a blind-bidding situation and having no idea if you are close, far, or bidding against yourself. 

The overall outlook should be to remember your budget, and be willing to walk away if you are near your max. 

Every bidding war has a different chance of success, and several factors will determine the chance success, including the area and the starting list price (whether it is very low or priced at market price). 

After December 1, 2023, Sellers will be able to decide if they wish to disclose the contents of offers, but Buyers will not be able to make that decision for themselves. 

Buyers should understand their budgets and not get swept up in the emotional whirlwind of winning. 

The other factor is whether your mortgage lender will have a different opinion on the purchase price, so make sure that your Offers are likely to appraise (your Agent should be able to guide you with pricing), and be prepared to deal with appraisal fallout if more cash is needed. 

Communication is key here, and good discussion about strategy before you submit your offer is recommend. 

How To Buy A House

 So how do you buy a house? Or a condominium? 

Whether you are traditionally employed by a company or institution or are self-employed, the process will be similar as we see in the following points. 

The very first day: Call a real estate agent and have an in-depth conversation about what you want, and decide if it will be a good fit working together. They can help navigate the overall process and can refer professionals if needed, for example mortgage brokers, lawyers and so forth. 

1) Mortgage Broker - this is the first person to call and determine what your budget is. You will fill out a mortgage application, do a credit check and your mortgage broker will find the best lender out of their database. It is recommended to work with an experienced mortgage broker with several years of experience and good connections in the lending space. 

2a) Real Estate Agent - your real estate agent will work to narrow down properties in your search and arrange showings based on your preferences including budget and area. They will also help refer other professionals if needed: Home inspectors, lawyers, appraisers, surveyors, mortgage brokers etc.

2b) Real Estate Agent - once you find a property you would like to buy, your agent will will negotiate the price, conditions, clauses and closing date, and will help to explain the process of successfully closing. Pick an agent with experience in the industry as there are complexities in the process. Agents are for your benefit and protection, choose wisely! 

3) The Lawyer - your lawyer will be the point of contact once you have an accepted Offer on a property. They will connect with your mortgage broker and lender to transfer funds to the seller on closing, and will assist with title searches and even permit lookups if needed. 

4) Closing - your lawyer will let you know when title is transferred on closing day, and when you are fine to pick up your keys and enter your new home.

5) Celebrate! - buying a new property is challenging and complex in process, so enjoy the day! 

Deposits

Bank Draft or Certified Cheque

Why do we need a deposit with an Offer? 

It is a show of good faith that the buyer intends to close their purchase transaction with the seller. There is no specific requirement for how much the deposit needs to be, but in big markets, 5-6% is desirable to sellers. More than that may be offered to the seller to show their strength in financing. 

When an Agreement of Purchase and Sale has been signed by all parties, typically a deposit will need to be delivered to the listing brokerage in a specific amount of time.

The Agreement may say "Upon Acceptance", "Herewith", or "As otherwise agreed",  and there are different timelines that apply.

• Upon Acceptance: the deposit will be delivered within 24 hours after acceptance. That means that it's 24 hours, not business days. If that means it's on a Sunday, that's how it goes. Appropriate adjustment to verbiage is needed if the Buyers cannot deliver it on Sundays. 

• Herewith: the deposit will be delivered immediately after acceptance. Typically this applies in multiple-offer scenarios where buyers show they are ready to hand it over to the seller's brokerage if their offer is accepted. Sellers like this, and ensures that there will not be a problem where the Buyer does not deliver it as agreed. 

• As otherwise agreed: the deposit may take more than 24 hours to be delivered to the listing brokerage, so this would require specific verbiage to clarify the timelines. 

It is important to understand that once an Offer is accepted by all parties, the deposit is due in the timeline agreed to. If the buyer does not deliver it by the due date/time, they are considered to be in a legal breach, and the Seller has powers available to them to pursue legal action, and/or potentially sell to another Buyer. This is a very complex scenario, so it is best to ensure funds are available to deliver it on time. 

Trust In Real Estate Services Act (TRESA)

TRESA

On December 1, 2023 there will be a change from the Real Estate Business Brokers Services Act (REBBA), to the Trust In Real Estate Services Act (TRESA).