This year has seen a significant increase in real estate bidding wars, with the competition in the Toronto real estate market heating up. Typically, agents list with one of two strategies.

1) Price below value with an ‘offer day’ to entice multiple offers, achieving a final sale price well above list.

2) Price at value with offers accepted anytime achieving a final sale price that is closer to the list price.

When it comes to the former strategy, otherwise known as a bidding war, you’ll want to ensure your offer is competitive. Here are five things you can do to make your offer stand out.

–       Make the Highest Offer

If someone asks how to win a bidding war, the obvious answer is to offer the most money. I’m merely including it here to make sure I’ve covered everything. Of course, in any case involving an offer, making the higher offer is one of the greatest strategies.

Outbidding your opponent is the simplest approach to prevail in a real estate bidding war or any other issue. You’ll be the seller’s first pick if you can raise just a little bit more cash than the other bidder. When it comes to making a final selection, a greater offer normally carries more weight than a lower one. Offering the list price typically does not cut it in bidding wars. It is actually quite common in the Toronto real estate market for a home to receive offers that are $200k – $500k over asking.

There is a good chance that the vendor you’re working with is motivated by the same desire to maximize profits as you. There are purchasers who are willing to go the additional mile for a property they really adore in wild seller’s markets. If you’re a buyer in a bidding war, competition is something you’ll have to deal with.

–       Take into account the seller’s desired closing date

Most sellers have an ideal closing date, typically, they too are moving and are trying to align their dates, minimize fees and the need to carry two mortgages. While money still talks, you may find that an offer with an aptly timed close carries a greater weight in a bidding battle.

–       Waive off financial contingency

The financing contingency is the commitment you make with the seller that you’ll only buy the property if your home loan is approved, and funds are made available. If the lender refuses to provide you with the funds, you will simply have to say “Sorry” and walk away from the deal.

Waivers, on the other hand, convey to the seller your certainty that you will be approved for the loan, regardless of the circumstances. Earnest money deposits are normally five percent of the purchase price, which is a lot of money for a buyer to lose if he or she is refused a mortgage. As long as the buyer has their earnest money in escrow, they are obligated to purchase the home. It may be a little nerve-wracking to waive the financing contingency, but it can be done with very little risk on your part. A fully underwritten loan pre-approval is all that is required. In the event that you can get one of them, you can be certain that your loan will be approved, and the transaction will go smoothly.

–       Waive off home inspection contingency

In a bidding battle, bidders who are prepared to forgo a house inspection may gain a major edge by doing so. When purchasing a house, a buyer has the option of canceling the contract if they uncover any flaws with the property that they deem undesirable.

This entitlement, known as the inspection contingency, might be waived in order to make your offer more attractive to potential buyers. When a seller knows that a house inspection may uncover flaws, it might be advantageous to waive the inspection in a bidding battle. A buyer’s second chance to haggle with a seller is frequently the house inspection. Many times, a buyer and seller may come to an agreement after a house inspection.

However, in a bidding war you really don’t have the ability to haggle, especially not in the Toronto real estate market where competition is fierce. Instead, most sellers who list with an offer date will have an inspection completed prior to going to market. A home inspection report will be shared with potential purchasers so that everyone is aware of the current condition of the property.

Waiving the inspection is a major benefit if the house has faults, particularly ones that may cost the seller a lot of money to fix. Remember that if you don’t have your house inspected, you’re taking a big risk on your own.

–       Remove the appraisal contingency language

Additionally, many real estate brokers include wording in their contracts that reads “subject to the property being appraised at the purchase price or higher.” Removing an appraisal contingency is critical if you want to win a bidding battle for a house. Trying to outbid another bidder by including a condition like this is a waste of time. Your aim is to be the winning offer. The seller won’t have to be concerned about the deal being ruined by an appraiser anymore.

–       Provide a photo of the bank draft deposit with your offer

Many Toronto properties that list with an offer day get multiple competitive offers. To ensure the sellers know that you are serious it’s important to provide a bank draft for the entire 5% deposit amount with your offer. Simply snapping a photo of your bank draft and sharing that along with your competitive offer will let them know you mean business.

–       Show hard cash

This one is tough for most buyers in the Toronto real estate market as prices far outpace incomes. However, if you have the ability to write an all cash offer this will certainly tell the sellers you want the home!

When writing a compelling offer, it helps to think like a real estate investor from time to time. Investing in real estate frequently involves making a “clean offer,” which includes paying in cash. Cash reigns supreme. One benefit of a monetary offer is that it may be made at any time.

This strategy easily defeats all others used in bidding wars (except maybe offering the highest bid). The eyes of most vendors will light up if an all-cash offer is made. “I’m a serious customer,” it proclaims. There are several advantages to stacks of cash, not just because they stoke the flames of human desire, but for the seller’s convenience as well.

Getting a mortgage is a complicated process that has a lot of room for error. Innumerable house transactions have fallen through because of problems between the lender and the buyer. This kills sales and leaves sellers rushing to find another solution. If you’re a cash buyer, let the seller know that you’re ready to move in as soon as feasible.

There are no questions, no obstacles, and no third-party rejections. If a lender finds out about a borrower’s poor credit history at the last minute, there will be no problems getting a mortgage preapproval. To make an all-cash offer, you obviously need to have the money on hand. Because the great majority of purchasers don’t, it’s frequently essential to adopt a different approach. It’s a good idea to let go of your financial backup plan. But it’s not the same as having the money on hand. There is still a risk for the seller if you need a mortgage. When it comes to bidding wars, the adage “cash is king” couldn’t be more applicable.

–       Write a personalized letter

You may be surprised to learn that writing a personal letter to the seller might put you ahead of other purchasers in a significant manner. No, not every time, but often enough that you should at least give it a go. You may go to the heart of the buyer by writing a personal letter. Your shared interests and family life, for example, might be emphasized. Making a personal connection with the vendor is a great strategy to gain their trust.

For example, you may mention how the house would allow you to give back to the community and be a good example for your children. You have a wide range of options at your disposal. Choosing one should be based on what you know about it and how it makes you feel, as well as the specifics of your situation. Check out some of the seller’s personal mementos and photos while you’re visiting the house. It’s possible that you have some similar interests with each other.

A friend or family member who is better at writing may help you with the letter if you don’t feel comfortable doing it on your own. As you write the letter, try to be sincere and put a bit of yourself into it. Consider contacting your real estate agent as well throughout the process. To win a property, you need to put your best foot forward in a letter that is well-crafted. As a seller, it’s usually helpful to include a photo of yourself on the contract.

However, there is one caveat to keep in mind: personal communications have a considerably lower impact on investors. They just care about the money. You may still write a letter, but don’t expect too much from it either. Make sure to keep in mind that a letter is more suited for an emotional thinker than an analytical thinker. Analytical thinkers of course, are more likely to focus only on the bottom line.

–       Inspect the home as fast as possible

Keep the contingency period low if you are frightened of skipping the house inspection entirely! In a real estate transaction, every contingency is an obstacle for the seller. The seller will be relieved of a major burden if the house inspection contingency is limited to a short period of time.

When a buyer accepts a seller’s offer, the house is no longer on the market. In a seller’s market, owners don’t want to wait long for the inspection to take place. It’s best to keep the contingency period under a week.