Muskoka cottage properties have been coming to market and selling within days. Many for well over ask. Multiple offers, also known as bidding wars, have become a regular occurrence in this hot Muskoka market. While this is good news for sellers, it leaves buyers frustrated and disheartened.
Multiple Offer Situation Explained
A multiple offer situation, or bidding war, is a real estate term for when a seller stipulates an offer receipt date and does not look at offers prior to this. The seller typically receives multiple offers in a short period of time. This also means the seller can wait to see whether buyers are willing to increase their offers – and by how much – along with other concessions to make their offers more attractive.
In a hot market such as we currently find here in Muskoka and other rural and suburban areas, it’s not uncommon for the seller to receive a pre-emptive or bully offer. A bully offer is made before the scheduled offer deadline. Such an offer is typically at a very lucrative price to entice the seller not to wait until all “bids” are in.
TIPS FOR BUYERS
What can a Buyer do to Win a Bidding War?
Know what your bottom line is before you instruct your Realtor to prepare your offer. Using a local, experienced Realtor will help in this aspect as they know the market and product. Competition is fierce and, if you have your heart set on this particular property you will need to go in with your highest and best offer. Alternatively, you can give yourself a little wiggle room, but show the seller you are realistic. And know that the seller may reject your offer outright if it's not competitive with the others.
It helps to know the Sellers preferred deposit amount. If the Seller has not indicated this amount the buyer may wish to offer a high deposit. The higher the deposit, the less likely the buyer is to walk away from the sale. The seller will recognize this and appreciate the good gesture.
If known, buyers should structure their offer with the seller’s preferred closing date. If the seller is in a hurry to move on, the buyer can offer a quick closing. If the Seller needs more time to move or if they wish to spend one last summer at the cottage the buyer can choose a delayed closing date.
Pre-Offer Inspections and Appraisals
In anticipation of a multiple offer situation, some sellers will have a home inspection completed for potential buyers and will make this report available prior to the offer presentation date.
If the seller has not completed a home inspection however, a buyer can have the cottage inspected before making their offer and buy it “as-is”. A pre-offer inspection or appraisal can eliminate the need to include an inspection condition or make the sale contingent on the cottage appraising for a certain amount. A seller will always prefer a clean offer with few or no conditions.
Are there any extra steps we can take to ensure a win?
Yes! Hire local. I cannot stress this enough. I have seen many buyers “win” the bid not knowing fully what they are buying. With your best interest in mind, I highly recommend knowing what you are buying so if you do “win” you also have no regrets. Using a local, experienced Realtor who knows the product and will tell you the pros and cons of the property is crucial at any time, and even more so in this fast-paced market.
A local realtor will know the intricacies of the property and the current by-laws that affect what you can do with the cottage and other structures once you own it. Unfortunately, many buyers are using out of town agents, winning the bid and then finding out after the fact that they can’t do what they intended.
There are so many factors to consider when purchasing a cottage or waterfront property, here are just a few things your experienced Muskoka Realtor will be able to tell you:
- what the boat traffic is like at different times of the day
- what the water quality is like year-round. A shoreline can be pristine in May and full of weeds by summer. In this unprecedented market we are seeing waterfront listed in winter when you can’t inspect the water or shoreline
- what exposure is best suited to your preference. The property may receive sunsets, but that might be in January
- if the frontage, lot coverage and by-laws allow for further development, boathouse or sports court
- whether there is any EP (environmentally protected) zoning that impacts the shoreline
- the neighbourhood; if there is a summer camp or marina close by that will affect your peace and tranquility
The Personal Touch
Along with your best offer its not unusual for a seller to be influenced by a heartfelt letter from you asking for special consideration.
As a Buyer, you have a right to know how many other offers exist before we present yours. Knowing how many others you are competing will dictate your actions. Depending on your level of interest in the cottage property you may wish to refrain from offering; withdraw or increase your offer.
If you are hoping to buy a cottage in Muskoka, I strongly urge you to contact me as I can provide you with the details you won’t otherwise find on the internet. And, with my vast network I am privy to properties coming to market before they are listed publicly. If you wait until you see a property on Realtor.ca you might be too late.
I understand you may have a trusting relationship with your city or other area real estate agent. I appreciate your loyalty to the professional who has assisted you in other transactions. If this is the case, you can tell your agent you would like to collaborate with a local agent. My “Colleague Referral” program will make them rest easy that you are being taken care of and you will have total peace of mind with local representation.
Need more information first? Visit my “Buying a Cottage Property” page.
MUSKOKA WATERFRONT SELLERS
Luckily for you, we are in a “sellers market”. I strongly advise discussing the current Muskoka market conditions with your local Realtor to determine your best course of action.
Legal Obligations Once Listed
The law is clear: your Realtor must convey an offer to you as soon as possible. An exception arises if you, the seller client has given clear, detailed, and express written direction to do otherwise. You may want to delay consideration of offers to a specific time and date, as part of a marketing strategy to set the stage for multiple offers.
Your Realtor must act in strict accordance with the instructions given by you. It is crucial that the written direction is detailed and very clear, and that your decision is based on all the facts.
In consideration of holding a delayed offer date; your Realtor is obligated by RECO (Real Estate Council of Ontario) to explain:
• the pros and cons of delaying the offer presentation to a specific time and date
• the options for handling any pre-emptive offers that you receive
And know that you may change your mind and therefore your instructions at any time.
Be prepared to receive pre-emptive or bully offers. If you do not want to entertain bully offers your Realtor can make this known. However, a buyer and their agent may attempt one anyway.
Sellers should evaluate multiple offers with an eye on the big picture. Although the purchase price is certainly important, so is an earnest deposit. Another factor to consider is the closing date. Choose a best date for you but be prepared to be flexible on this depending on the other offer details.
Discuss with your listing agent if you want to indicate up front:
• your preferred closing date
• your preferred deposit amount
• a home inspection completed by you and made available along with other relevant documents
By providing these details, you are leveling the playing field for potential buyers and then it really just comes down to price.
If you are thinking about selling your Muskoka cottage, please give me a call to discuss the best strategy for getting you the highest price while minimizing stress and inconvenience to you. And, visit my “Selling Your Cottage” page for more on what you can expect from my 26 years experience selling Muskoka waterfront.
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