Selling a home is a long process involving many steps. You’ll need to find a real estate agent, perform necessary repairs, market your house to reach the broadest possible audience, and vacate for showings. While it might seem like these steps represent the bulk of the work, the final step, managing the offers, can drastically impact your final sale price – especially if you start a bidding war.
What is a Bidding War?
Unlike the traditional homebuying process, a bidding war happens when multiple buyers are interested in making an offer. A bidding war is when several buyers submit bids on a single property. The seller then can choose the highest or best bidder. Bidding wars usually have the following characteristics:
- More than one interested buyer
- Offers are typically held off until a specific day
- The offer submission date results in several bids being submitted at the same time
A bidding war can be helpful to a seller because buyers will compete against each other to offer the highest bid. This competition usually results in an overall higher selling price.
What are the Rules of a Bidding Wars?
While bidding wars are common, they are subject to strict regulation. The Canadian Real Estate Association (CREA) has rules and guidelines regarding bidding wars. Real estate agents have a duty to protect and promote their clients’ interests. That means your real estate agent needs to act in your best interest and do what is best for you.
Your real estate agent must also disclose if they represent more than one client in the sale, and they can’t use private information to give a bidder a competitive advantage.
Finally, your real estate agent can’t disclose information to bidders about competing offers. Again, this rule varies by province. For example, some regions allow the seller’s agent to disclose that there are additional offers but not the value of those offers.
Use These Strategies to Start a Bidding War
If you’re looking to maximize your home’s sale price, a bidding war is a surefire way to do so. But a good bidding war starts with preparation. Here are the steps you should take to ensure your home sells for its maximum price.
1. Put Your Home’s Best Foot Forward
It’s essential to present your home as pristine and well-maintained to incite the sense of urgency required for a bidding war. Before listing your home for sale, consider spending money and time to improve its curb appeal and make minor repairs. Consider these small, inexpensive upgrades that will make your home stand out as the perfect property:
- Fresh mulch on garden beds
- Professional cleaning
- Touch up wall paint and trim
- Decluttering excess possessions
- Small repairs
- Professional staging
2. Maximize Market Exposure
Bidding wars are a numbers game, and you’ll need to market your home to get the most significant number of viewings as quickly as possible. It’s not enough to stick your home on the Multiple Listing Service, put out a lawn sign or hold an open house. While those tactics are essential, your real estate agent should have additional strategies to attract your home’s correct type of buyer.
Your real estate agent should present you with a comprehensive plan to market your home and attract buyers. The more people who know your home is for sale, the greater the chance of getting multiple bids on the property — and numerous bids are a solid strategy for higher sale prices. The plan should include videography, virtual tours, social media outreach, and a rapid succession of viewing opportunities as soon as the property hits the market.
3. Price Aggressively
A simple yet effective strategy to ensure a bidding war is to price your home under market value. This strategy is a classic indication to buyers that the seller expects a bidding war. In this scenario, it’s not enough for a buyer to make an offer at or slightly below the asking price.
Instead, they’ll need to study the market and make an offer above the listing price. How much above depends on several factors, including the state of the current market. This point in the listing process is when the bidding war kicks off – when multiple bidders submit offers that they think will beat out all other bidders.
4. Hold Offers Until a Specific Date
If you’re listing your home to start a bidding war, your real estate agent should “hold offers” for up to a week for several days. Holding offers means that buyers cannot submit an offer right away and instead must wait until a designated day and time. Waiting allows many buyers to view the home, and then all bids are submitted simultaneously. You’ll have the opportunity to review the offers and select the best option for you.
While bidding wars were once only found in major Canadian cities, they are often the norm for many parts of Canada, which means that more sellers have the opportunity to use bidding wars to sell their homes for the maximum possible amount. If you’re interested in starting a bidding war on your home, the steps above will help you get the most possible bids and the highest possible price.
