Posts Tagged ‘bidding war’

Understanding the process of putting an offer on a home could save you in the long run. In some areas the buyer’s agent will call the seller’s agent advising them that they will be bringing an offer later on that day. That however is not a guarantee and doesn’t mean that they will indeed do it. The buyers could simply change their mind and therefore there would be no offer. The seller may get a few of these so-called offers during the day with no guaranteed that any of them would be presented. In an effort to create a sense of urgency the listing agent might tell potential buyers that he is expecting offers later on the day. The thought behind this is quite similar to airlines or travel agents that states that there is only 2 seats left at the low price when often it is not the case.

Buyers should understand the bidding war and safeguard themselves by asking their agent to add a bidding war clause in their offer. The clause could say something to the effect that the buyer is presenting his offer based on the assumption that multiple offers will be presented to the seller that same evening and that if the seller receives no other offers by a certain time, then the buyer can change their mind, cancel the deal or change the price.

If the seller accepts the buyer’s offer, he must provide the buyer with proof he has received another offer which mean providing at least the name, address and phone number of the real estate agent who presented the rival offer.

In using this clause, the buyer has the assurance that if his offer is accepted, the seller will have to prove that he indeed did have at least one other offer available.

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According to a recent web-based poll by Leger Marketing 75 per cent of respondents said they would walk away from a bidding war on a home they wanted to buy.

But about half of those willing to bid against other buyers said they would pay as much as 10 per cent above the list price.

A small percentage said they’d pay as much as 20 per cent above list price when bidding for a home.

Men were more willing than women to bid as much as 120 per cent of the listing price.

Only one-in-five women (20 per cent) said they would bid 120 per cent of asking price, compared with about one-in-three men (34 per cent).

Respondents in Ontario, Manitoba and Saskatchewan were the most likely to agree to pay above asking price. Those surveyed in Quebec and Atlantic Canada were the least likely to participate in a home bidding war.

A survey of this type is considered accurate within 3.1 percentage points, 19 times out of 20 — although regional breakdowns are less accurate.