Despite reports of the housing market slowing down, all over the city, bidding wars are taking place everyday on hot spot properties! Statistics show that 37% of first time home buyers are more than willing to go over their max budget for their mortgage if they feel it is their ‘dream home’. Contrary to a BMO survey conducted that showed 72% of buyers would avoid getting into a bidding war over the property due to the inconvenience and uncertainty.
Based on these statistics and the market in the GTA in particular, it is evident that if you want a property in a hot spot location, be prepared to enter a bidding war. The most important factor to consider when entering a bidding war for a property is that ‘Is this below, at, or over market value?’, ‘will I see any return based on my offer price if it gets accepted?’, and last but most certainly NOT least ‘Can I afford to be putting in this offer?’.
Based on those important questions, this is why a mortgage broker is the perfect solution. They can work with you and get you a pre-approval to know what your max budget is to work with so you are not over spending. Also, work with a Realtor whom you trust. They will know whether or not you are paying over market value for the property. In some cases, buyer’s will produce an offer over market value which gets accepted. When they go to get their financing in place for the property in most cases an appraisal [appraiser comes in and evaluates based on a number of variables what the property is ultimately worth] of their property is required. If the appraisal price comes back lower than the buyer’s accepted offer then the buyer has to then be prepared to put a heftier down payment on the property to compensate for the short fall of funds.
Always be aware and prepared for the unexpected if you do find yourself in a bidding war, this is where your trusted mortgage broker and realtor come to your aid! Call Robert Clancy today to get protected with a pre-approval and a trust realtor!
Below is an article that can help you through a bidding war: