What Home Buyers Need to Know About Multiple Offers
In 1998 my family sold my grandma’s home, a home that she had lived in for 40+ years for $91,500. Back then, there were no multiple offers and we weren’t experiencing a “hot” sellers market. Even so, she would have been astonished at this princely sum. My grandmother had always treated her home with pride, as both an investment into her quality of life and financially.
From a financial perspective, it is important to remember that a home purchase is likely to be the largest purchase a person will ever make. Buying a home shouldn’t be taken lightly. Time, consideration and an understanding of the process are necessary to make sure that you make an informed decision.
In March, I noticed that her house had been listed on the market for $329,000. Showings took place over a Saturday and Sunday and on Monday, offers were presented. Multiple offers were received.
Here’s the thing, in Manitoba we are experiencing a very “hot” seller’s market. Little inventory, low interest rates and the pandemic have created the perfect storm for people in a position to sell. This means that as a buyer you are most likely to find yourself in a multiple offer situation.
Here is what you need to know about multiple offers:
In Manitoba, a real estate agent is required to advise a buyer if they are in a multiple offer situation While they can’t tell you what the other offers are, how your offer ranks or other confidential information, they should help guide you through the process including helping you to understand the four choices that you generally have:
- Increase your offer.
- Leave your offer as is.
- Withdraw your offer.
- Reconsider the terms, conditions and items included or excluded from your offer.
Before participating in a multiple offer situation, and even before making any offer in a seller’s market, it is important to consider the following:
- Offer price – what can your reasonably afford? Are you willing to increase your offer and if so by how much?
- Your interest in securing a property disclosure statement and home inspection. To increase the chance that your offer is accepted by presenting a “clean” offer, are you willing to forgo a home inspection or property disclosure statement? What are the risks associated with taking this route?
- Closing Date
So what happened to my grandma’s house in this market? She would have been flabbergasted to know that there were multiple offers made which likely contributed to the final sale price of $475,000, $146,000 over asking.
I have such fond memories of my grandma’s house. How we snuck sugar cubes from the china cabinet, the Allen’s Hawaiian fruit punch that she served us, and the big back yard with the tire swing. And while my grandma would have said that owning a house can contribute to creating a happy family life, she would have also said don’t lose sight of understanding the process and making informed decisions as you negotiate this very large financial commitment.
For a more detailed explanation on the items above, refer to our information sheet on:
– Ainsley Cunningham
Founder and Project Coordinator, MoneySmart Manitoba
Manager, Education & Communications, Manitoba Financial Services Agency