I was recently in a multiple offer situation on a home in Applewood. The home was detached, 3 beds with a separate entrance and basement apartment. It was the kind of home that everyone is looking for these days with home prices way up. I have buyers all the time wanting to offset their mortgage costs with rental income so these types of properties are in high demand.
There was one issue with the place though. It was a complete dump. It needed to be completely stripped to the studs.
You’d think that would make people shy away from it, but sadly that wasn’t the case. The list price only made it all the more tempting and by 5pm on offer date there were 37 offers on the property and counting.
Yes, you read that right. 37 offers. For a home in Mississauga.
And as you can probably guess the home sold for a lot more than list price. In fact, it sold $200K over asking. And that’s not some bargain either. I honestly have no idea how anyone will turn a profit on this one. You’ll be well into the million dollar mark, even as a contractor/renovator, to fix this puppy up.
The State of the Mississauga Real Estate Market
I’ve written about this several times already but I don’t think people truly understand what the market is like today. The average buyer interacts with the market maybe once every five years and in that time the market can change drastically. Almost daily I speak and meet with buyers that just have no idea what they’re getting into and when I educate them on the realities of Mississauga’s real estate market they are often dismayed and surprised.
The ones that are determined to purchase despite the ongoing conditions are the most successful. They understand the work that needs to be done and are not simply in “browsing mode” where it would be nice to purchase a home but in reality they have no real motivation to do it.
And in today’s market you simply can’t window shop. That’s the harsh reality. You have to educate yourself and get a firm understanding of what it takes to purchase a home in today’s competitive real estate market.
What do I need to expect?
If you see a really well photographed house and the interior is fantastically renovated and the list price seems reasonable then 99 times out of 100 there will be an offer date on the home.
What does that mean?
That means the seller and agent are planning to get multiple offers on the home by delaying the acceptance of any offers until a specific date (generally from 4-10 days in the future). They want to allow as many people in as possible and have likely listed the home below market value to entice people to put in an offer.
The more people that offer on the home the more those buyers believe the home will sell for which in turn makes them increase their own offer.
How do I win a multiple offer in Mississauga?
The steps are very simple:
- Get pre-approved: The first conditional clause that gets removed from an offer to purchase is the financing condition. This means that you are confident your mortgage will get approved by a bank. If you have been working closely with your broker and completed all the necessary documents then you should feel confident removing this condition.
- Forget the home inspection: This sounds crazy right? Unfortunately this is the reality of the market right now. Most multiple offer winners are removing this clause and taking the chance that the home isn’t about to blow over. This is increasingly becoming the norm in our market.
- Budget for at least $50K over asking: This depends on how closely the home is listed to true market value but even in instances where it’s fairly close we’re seeing homes routinely sell for MUCH more than market value.
- Have your deposit ready: Bring a deposit cheque with your offer to make it the ultimate FIRM offer (no conditions + deposit cheque = binding agreement to purchase).
- Line up closing dates: Whatever closing date the seller wants be prepared to give that to them.
Keep in mind this is not necessarily the case for every multiple offer scenario but it’s increasingly becoming standard fare. The most that you can do is fully educate yourself about the process before calling up a realtor to go check out homes. If you’re really determined to purchase a home you still very much can but it definitely takes a lot more preparation and you must find a realtor that understands how the market works in order to guide you through what is a very difficult process right now.