A bidding war in real estate is a result of high demand and low inventory. In this kind of real estate market, multiple offers on a home are common, but a bidding war intensifies the buyers’ competition and benefits the seller. Short deadlines and tight windows to review offers, combined with incremental outbids and oral negotiations turn bidding wars into an aggressive battle for higher prices and a race to win the bid. Bidding wars have increased significantly in Ontario this year because of the surprising surge in the real estate market. In Toronto, home sales have doubled since last year and average prices rose to $1.1 million.
ARE BIDDING WARS LEGAL?
For home sellers and their agents, bidding wars are beneficial because they lead to higher selling prices. But for home buyers, bidding wars present a stressful challenge and puts them into a vulnerable position that can lead to reckless decisions.
HOW TO AVOID A BIDDING WAR WHEN BUYING A HOUSE
If you’re not in a hurry to buy a house, consider waiting for the “off season”. Winter usually sees a drop in inventory and demand. This means less competition for buyers.