How to be Successful in a Multiple Offer Situation
in the Victoria Real Estate Market
When the inventory level of homes for sale in Victoria drops, we often see an increase in the number of properties that receive multiple offers from home buyers. This is especially true of single-family homes, but also the case with strata duplexes, townhomes and to a lesser degree, condos.What you can expect in a multiple offer situation when buying a home in Victoria? Here is what to expect in a multiple offer situation and a few tips on how to maximize the possibility of having your offer accepted.
In a seller’s market, when inventory is low, many home sellers will “hold offers“. That means that the seller has decided to have the home exposed to the market for a number of days before considering offers from potential buyers. So, for instance, a home may be listed on a Thursday and the seller has determined to not look at any offers until the following Monday. Usually, if offers are being held, it is over a weekend in order to allow the maximum number of buyers to see the house. There are pros and cons to this approach, which we discuss with our seller clients.
Another variation we are seeing in our market is for the listing Realtor to note in the listing that offers must be open for a certain number of hours, usually 24 or 48 hours. In this situation, the home seller doesn’t have to deal with the offer immediately. It gives the them more time to consider the offer and may also provide the opportunity for other house hunters to to see the property and potentially write an offer.
Sometimes, if a property is listed on a Thursday with offers held until Monday, a home buyer may decide that they don’t want to wait until Monday to make their offer. They may present their offer on Saturday afternoon and give the seller only until Saturday evening to accept. This type of offer is referred to as a “bully offer”. When a home seller receives a bully offer, they have to consider a number of things, including whether they believe that they’re going to get a better offer if they wait until the time that offers are to be presented and, if they reject the bully offer, whether they think the party making the bully offer will present an offer at the time set for presentation of offers. Some sellers will reject virtually any bully offer, thinking that they’ll achieve the best results if they wait for the presentation time. Other sellers will reject virtually any bully offers because they feel that accepting a bully offer is not fair to other potential home buyers. Many sellers of residential real estate will seriously consider or accept a bully offer if they feel that the terms are just too attractive to resist. For instance, if a property is listed at $800,000 and a bully offer comes in at for 10%, 15% or 30% over the asking price, it may be too hard for a seller of the property to resist.
Let’s assume that a bully offer has not been made, or if one has been made, it hasn’t been accepted.
Unlike some jurisdictions, in Victoria and BC generally, there is no organized system as to how multiple offers must be dealt with.
Whether offers to buy a home are being “held” or a number of offers just happen to be received at the same time, the listing Realtor will usually advise all buyers who presented offers that their offers will be dealt with at a certain time by the seller of the property.
It used to be the case that Realtors acting for buyers always presented their offers in person to the seller. While this is sometimes still done today, it is more common for the listing Realtor to just ask that offers to be emailed and then the listing Realtor reviews all offers with the seller. They review the key terms of the offer which are: price, deposit, inclusions (i.e. appliances and other chattels), time for acceptance, conditions (such as financing and inspection), date the conditions are to be removed and completion date.
In a multiple offer situation, after all the offers have been reviewed, typically one of the following happens in the Greater Victoria area, which includes Oak Bay, Saanich and Sidney:
- The seller accepts one of the offers. This happens if the seller feels that one of the offers is clearly superior to the others and meets, or exceeds, the home seller’s expectations.
- The seller counters one of the offers. This typically occurs if one of the offers is a clear favourite of the home owner, but there is a term or terms in that offer that the seller feels should be improved. For example, the price or completion date may not be satisfactory to the seller.
- The seller rejects all the offers. A home seller may sometimes reject all offers if none of them meet the seller’s expectations. This can be the result of a seller having expectations that are too high, or it may be that the property was priced too low and all offers came in around the list price. It could also be that the “right” buyer has not yet seen the property.
- The home seller chooses two or more offers for a second round. This often happens when two or more offers from different buyers are very close. In this case, the listing Realtor contacts two or more of the potential buyer’s Realtors and asks them if they would like to make any changes to their offer or resubmit new offers.
There are a number of things that home buyers can do to make their offer as attractive as possible to a seller in a multiple offer situation. Here are a few tips:
- Without a doubt, price is the most important element to the current owner of the property. When you’re in a multiple offer situation, you should “put your best foot forward”. You should make your offer in an amount that you can afford, but also assume that you won’t get a second chance. You don’t want to be in a situation where a different offer, slightly higher than yours gets accepted and you regret not having made a higher offer than you did. By way of example, if you offered $950,000 and the party who offered $955,000 ends up with the property, you don’t want to feel that you could have afforded and should have offered $960,000. You want to be able to say to yourself “I don’t regret offering more than $950,000“.
- Keep your offer “clean,” by having as few conditions as possible in your offer and make the conditional period as short as possible. The seller will not know if their properties is actually sold until the buyer has released their conditions, be that financing, home inspection or otherwise. For that reason, the shorter the conditional period, the more attractive the offer will be to the seller. If you require a financing condition, before you present an offer, you should speak to your mortgage broker or lender and find out what is the least number of days your lender needs to give you final mortgage approval once you have an accepted offer.
- Give the seller exactly what they want so far as you are able to do so provided your interests are protected. A home seller may want a specific completion date because they’ve bought another house or have plans for the sale proceeds. If you can give them the closing date they want, it will make your offer more appealing. Another example may be that the seller may want to take the brand new stove to their next home. Sellers will be attracted to an offer that meets as many of their needs as possible.
- Don’t underestimate the power of a personal touch. Especially in situations where the home seller is more emotionally attached to their property, perhaps because it is the family where they raised the children, or perhaps where they poured out their passion as a gardener. Submitting a letter, a photograph, or even a video from you telling the home seller a little about yourself and why you love the home can sometimes give you a leg up in a multiple offer situation.
- There are a number of other strategies we employ to maximize the success rate of our home buyer clients in multiple offer situations. But perhaps, one of our biggest pieces of advice we like to give is to stay grounded. It is easy to get caught up in the frenzy when Victoria’s real estate market is hot, but you do not want to overpay, forgo important due diligence on the property, or make too hasty of a decision. When working with home buyers we sit down with you to get a throrough understanding of your wants, needs and budget – provide a valuation on the property you are considering buying – and be the person that helps you stay the course when the real estate market is more turbulent.
- Multiple offers on Vancouver Island , including Victoria, Oak Bay, Saanich, Sidney and all other Greater Victoria municipalities were particularly robust in the first and second quarter of 2021. As was the case in 2016 and 2017, we are seeing many multiple offer situations being won by buyers who make unconditional offers, but it’s important that you fully understand the risks of unconditional offers before considering this approach.
If you have questions on buying a home in the Greater Victoria area, please contact us as we would be delighted to help you open a new door. Contact us – we are here to help.
Ps. If you thinking of listing home in Greater Victoria we offer complimentary market valuations and if we are successful in winning your business, we’ll work hard to increase the return on your investment.
TOGETHER, Hal Decter, LL.B. and Audra Poole bring a unique level of knowledge, experience and service that is hard to find.
For eleven years, Hal Decter was a practicing real estate lawyer and partner with one of Canada’s top law firms. His client experience ranges from some of the country’s largest corporations to individuals and couples starting their first businesses or buying their first homes.
Audra Poole brings her research acumen and luxury marketing and sales talents to the team. She is a highly respected marketing and public relations executive with more than twenty years of local, regional and international experience.
Whether you are looking to buy or sell a home in Victoria, Oak Bay, Sidney or Saanich – we’ll be on your side and make the process as stress free and seamless as possible.