Canadian real estate was on track for a typically busy spring market. Then the pandemic hit, and social distancing measures, business closures and greater economic uncertainty ensued, leading to a dramatic (albeit temporary) downturn for home sales across the country. Interestingly, the decline in transactions was proportional to the decline in new listings coming on stream, which meant market balance didn’t change a whole lot in many regions. Seller’s markets were still seller’s markets, inventory was still low, and the competition remained fierce. Even during the pandemic, RE/MAX brokers reported multiple-offer scenarios in key Canadian housing markets such as Toronto, Ottawa and Vancouver, among others. This leads many to question what prompts multiple offers, and how do you win a bidding war?
What is a seller’s market, anyway?
In a seller’s market, there are more buyers than there are homes available for sale. The combination of limited inventory and high demand often puts upward pressure on prices. Homes typically sell quickly in a seller’s market, and multiple offers on a listing are more likely, giving the seller the upper hand.
Aside from the simple economics of supply and demand, what causes a bidding war on your house? There are a few factors that can prompt these circumstances.
When market conditions favour home sellers, it means demand is usually up and inventory is down. With few listings on the market, the seller and listing agent may choose to set an offer deadline by which interested buyers must submit their offers. The seller then reviews the offers and either accepts one, or can return to the buyers with the option to resubmit a better offer, if they so choose. However, buyers may not get a second chance to make an offer.