Caution to Buyers on Bidding Wars

Toronto’s housing market is a tough place for buyers.  This is mainly because there aren’t enough houses currently on the market to satisfy their demands.  It’s leading to many bidding wars where anywhere between 9-34 people are  bidding on the same house.  And it’s driving the price up of some homes to well over $100,000 over the asking price.  This is occurring in Toronto’s most affordable  neighbourhoods: Leslieville & Bloor/Dundas West.  Buyers get sick of losing out on so many houses that they decide to offer a very high price for a house to make sure they get it.  However there are ramifications for over paying for a house.  Will the bank’s appraiser agree that this is the new value of the house?  If the buyers are using CMHC, will their appraiser agree to finance the house if they don’t feel it’s worth what they paid?  In addition, buyers tend to waive their finance conditions to be competitive during a bidding war which presents a further problem, if the appraiser does not agree with this new value.  It’s something many buyers need to think of before they over pay for a potential home.  They should also keep in mind that the markets in May through the end of August can offer them a much calmer pace for purchasing houses, without as many bidding wars.