How do strategize your offer for a condo, especially if you’re not the only bidder?
Anyone who has bought a condo in the past probably understands that the bargaining portion of the buying process can be tricky. It gets even more complicated if you're in a bidding war with other potential buyers. There are a few things, however, which can help out significantly if you know them.
It's no secret that the most important thing to most sellers is the price. But how much should you be willing to offer? How much is too much? There are several things to consider when making these decisions. Apart from the obvious stuff like space and amenities on offer, your agent will look at similar properties up for sale to see how they compare with the seller's price. These properties may even be in the same building or nearby ones. This helps create an accurate estimate of the condo's worth, which you can then compare with the seller's asking price.
If, say, the seller's asking price is much higher than comparable properties, what do you do? If you're in a bidding war with other potential buyers, remember that the seller can afford to ask for a higher price because they know that the demand for the condo is high. At this point, the important thing is to ask yourself how badly you want this condo in particular. Are you willing to pay more for this condo, or would you rather take your condo hunt elsewhere? If you are ready to pay more, then how much is too much?
KEEP IN MIND THE BANK’S APPRAISAL
Knowing how much you're willing to pay for a condo is essential because you probably get a mortgage from a bank for it. The bank will carry out an independent appraisal of the condo to figure out its worth so that they can determine if you are genuinely paying what the property is worth or more.
The bank will only lend you the money they have appraised the condo at, and if they think that you are overpaying for the condo, they will ask you to take on any additional price (over the appraised rate) on your own. An experienced real estate agent will help you out with this process to ensure that it's easy for you and unnecessary complications don't arise.
BIDDING WARS GIVE THE SELLER AN ADVANTAGE
Typically, if you're the only one making an offer for the condo and the offer is accepted, you will need to make an initial deposit within a day. However, if you are in a bidding war and there are other bidders, it's advisable to have your deposit ready as you make the offer. Also, if you really want to seal the deal on a condo that has multiple bidders, you'll need to meet the seller's expectations on the closing date. If you truly want a different closing date, keep in mind that you may have to offer more money to make your offer worthwhile for the seller.
In summary, keep these points in mind:
- Know how much you’re willing to pay for a condo and where you draw the line.
- When deciding, don't forget the bank will carry out an appraisal of its property.
- If you're in a bidding war, you'll need to meet the seller's expectations to seal the deal truly.