No one wants to be caught in a bidding war when they’re trying to buy their dream home. As the price of the home increases with each offer, so does the level of frustration on the part of the buyers trying to win the war. But according to a new BMO Home Buying Report that was released yesterday, Canadians in some provinces are more likely to get involved in a bidding war; while in others, they’re likely to walk away from one altogether.
The provinces that were most likely to get involved in a bidding war were Manitoba and Saskatchewan, with 32% of respondents in these provinces saying that they’re willing to fight for their dream home. Those looking for Toronto mortgages and other Ontario mortgages came in second as most willing to participate, with 28% saying that they’re willing to take part in a bidding war. Out in Alberta, still a fairly high number of people – 25% – are willing to increase their offer in order to get the home right for them. B.C. was just behind Alberta at 23%; while Atlantic Canada and Quebec were least likely to take part in a bidding war, standing at 13% and 10%, respectively.
But those results alone don’t necessarily mean that Canadians in these provinces aren’t willing to pay a higher price for a home, only that they’re unwilling to fight another buyer for it. The survey also asked how many respondents would pay 100% – 110% of the asking price on the home. Those in Quebec, the province least likely to enter a bidding war, are most likely to offer this percentage, with 62% saying they’d be comfortable with that. 53% of respondents in both Alberta and B.C. also agreed that they would, with 51% in Ontario saying that was an appropriate amount for them. The Prairie provinces, which were most likely to enter a war, are least likely to pay that much, with only 48% saying they’d pay that much. Atlantic Canada still fell to the bottom of the pack on this question, with 44% saying that would seem like a fair price to them.
Going up just one level though, and asking respondents if they’d be happy paying between 100% – 120%, Atlantic Canada saw the highest level, with 33% in these provinces saying they’d pay that much above asking price. Ontario and B.C. tied on this one, with both provinces seeing 30% say they’d pay that much over the asking price. The Prairies came in near-last on this one at 22%, even though they’re the most likely to enter a bidding war. Alberta was the least likely to pay that much above asking, with only 17% saying that they’d be happy doing that.
But says Toronto mortgage broker John Pasalis, buyers must be careful when entering a bidding war, and not only because you want to make sure you don’t highly overpay for a home, but because “houses that are getting pretty crazy bidding wars are under-priced anywhere from 5% to 10%. The list prices aren’t always an indication of what they’re actually worth.”
