Let’s say you want to buy a new home in central Toronto.  And let’s make two fairly safe assumptions: 1. You know bidding wars occur fairly regularly; and 2. You won’t want to buy every home you see.

There are endless reasons as to why you may not want to buy a particular home. It could be too small. You might want it to be more renovated or have a bigger yard. You might want it to be closer to the subway. I could go on and on.

Some, but not all, listing agents contact buyers’ agents after they’ve shown the home to find out what the buyers thought of the home. This is commonly referred to in the industry as “requesting buyer feedback”.

I ask for buyer feedback for several reasons. I use it to gauge the level of interest the particular buyers have in the home so I’ll know which buyers might be thinking of making an offer and which buyers’ agents to keep in touch with. I use it as an opportunity to speak to the buyers’ agents and provide them with further information if it’ll help their buyers decide to make an offer on my clients’ home. And I use it to get an idea of what buyers in general think of the price since price is usually the single most important aspect of any marketing strategy.

Some buyers’ agents provide me with this feedback and some, more than I’d like to admit, choose not to reply. It’s often the busiest agents who reply most quickly and regularly and this professionalism is probably one of the things that makes people want to work with them and keeps them busy, but that’s a topic for another day.

Most feedback comments are specific to the home in question – not enough bathrooms, basement isn’t finished, no garage, street is too busy, master bedroom is too small, etc. But there are certain feedback comments I hear on a regular basis, such as “My clients can afford something larger” (which means the home is at the bottom of their price range and they really want something larger, more renovated or in a more expensive location) and “This home is at the top of my clients’ price range” (which means they don’t love the house and expect there to be a bidding war which they know they have no chance of winning since they can’t bid high enough).

One comment I hear quite often which I don’t really understand is “My clients love the home. Absolutely love it. It’s perfect for them. But they’ve made it clear to me they won’t get involved in a bidding war.” As the listing agent, it’s my job to try to find out what this means so I can provide them with information that will change their minds. I mean, they do love the home so why not make an offer?

When I hear this comment, I wonder to myself “What are they really saying?”

• Are they saying the home is at the top of their price range so they don’t want to waste their time getting involved in a bidding war they have no chance of winning?
• Are they saying they’re not ready to buy yet and need to see more homes because when you’re ready to buy in central Toronto, you have to expect to be involved in a bidding war?
• Are they saying they love the home to be polite, but they don’t really like the home?
• Or are they really saying that they won’t get involved in a bidding war? In central Toronto. In this market.

I can understand not wanting to get involved in a bidding war. It’s not a pleasant experience (unless you’re the seller) and you might be worried about getting caught up in the moment and overpaying. But saying you won’t get involved in a bidding war in central Toronto means you’re not even willing to try to buy one of the many good homes that are properly priced, as evidenced by the strong demand for these homes which results in the bidding war. If you won’t consider these homes, you’re severely limiting yourself to homes which don’t have broad appeal, usually because they’re overpriced or have a significant shortcoming.

Don’t do yourself this disservice. If you’re looking for a home in central Toronto, be prepared to make an offer on anything you like. You’ll always miss 100% of the shots you don’t take.

Don’t worry about being embarrassed to lose in a bidding war. Most buyers do. More than once. But eventually they win. Think of Josh Donaldson, the Blue Jays All-Star third baseman. This past season his batting average was .297. That means he got a hit 29.7% of the times he was at bat. Conversely, it means he DIDN’T get a hit 70.3% of the time. And yet he still went up to bat several times every game. With millions of people watching him in the stadium and on tv. Knowing he was more likely to fail than succeed. So who cares if you don’t win a bidding war?

Being concerned about overpaying is normal. We never want our clients to overpay. But you can overpay just as easily when you’re the only offer as you can when you’re in a bidding war. The key to not overpaying is having an appreciation for free market value. If a home is listed at $1.8m, but is worth $1.5m and you’re able to negotiate the price all the way down to $1.6m because you’re the only offer, you overpaid. On the other hand, if a home is listed at $899k, but worth about $1m and you pay $1,010,000 for it to win a bidding war, you didn’t overpay. [Check out Is That Price Right? for a more detailed look at this important subject.]

Don’t shy away from bidding wars because you’re worried about overpaying. Know what the home is worth, determine what you’re willing to pay for it beforehand, make an offer for that amount and stick to it (or very close to it). We always encourage our clients to adopt this approach and do our best to prevent them from getting carried away in the moment and doing something they’ll regret. This approach also helps keep the process more enjoyable for them as they don’t have to spend emotional energy figuring out their top price during each bidding round of an extended process since they’ve already done that. They can sit back and wait to see if they’ve got the best offer.

For example, clients of ours recently made an offer on a home they didn’t get. It was a very solid offer for more than list price. They knew the home might sell for more given the number of offers, but they wanted to do certain renovations to it and paying a higher price just didn’t make sense. They were better off buying something already renovated. They were disappointed when they didn’t win the bidding war, but they knew they gave it their best shot and they know they’ll find something better down the road. Houses are like buses. There’s always another one coming.

So please, don’t be the buyer who tells your agent “I refuse to participate in any bidding wars.” You’re only hurting yourself. You won’t get caught up in the moment if you set limits in advance and you won’t overpay if you have an understanding of free market value. You don’t have to feel badly if you don’t win because no one expects you to win (and there aren’t millions of people watching). So when you find a home you love, give it your best shot and see what happens. You may just be pleasantly surprised!

If you know anyone who’s interested in learning how the market works and who’d like to receive the kind of help that involves honest answers, straightforward advice, no pressure and being treated like family, please let me know the best way for me to connect with them because I’d like to offer them this kind of help. And as always, don’t be shy if you have any questions or comments about this post! Thanks for reading.