As I sit here writing this in the current ultra-competitive Toronto real estate market, I can say with considerable confidence that just about every buyer for a house in a reasonably desirable neighbourhood (hell, even in undesirable neighbourhoods) will find themselves in a multiple offer situation. Whether the current process is right or wrong is frankly beside the point – it simply is what it is. If you don’t like it you don’t have to take part, or you can move to somewhere like Oshawa and sip Zinfandel and whittle wood on your massive front porch. But here in prime Toronto, well you get the point…

What this means then is that as a buyer you are very likely to lose in a bidding war before you win. I’m sorry to crush the illusions of the prospective buyer that is “different” and going to get a house with their first offer, but again this is just the way it is. You will be a “loser”, probably more than once – and that’s ok! Embrace it, laugh about it, tell all of your family and friends the stories, and always remember that losing is an integral and valuable part of the buying process. It makes you better and sharper the next time out, and affords perspective that you just can’t gain any other way. It’s like becoming a parent for the first time or running a marathon – you can’t possibly understand what it is about until you experience it firsthand, and I know for a fact that the buyers who win the big bidding wars are the ones who have been through the wringer a bunch of times leading up to it.

From time to time I find myself presenting an offer in multiples that I know is never going to win. Never. Lots of agents do this, and for many the reason is to get a new buyer “on paper”, or in other words get them to sign a Buyer’s Representation Agreement. I do it because I know losing on an offer night puts a buyer in a much better position to win when they make their next offer. In a sense, your search really hasn’t started until you lose. Now don’t get me wrong, my goal is always to get my buyers the house on their first offer, but I am realistic about the process as well. I have been in bidding wars that had more than 10 offers twice in recent weeks, and in both cases the only way to have won would have been to dramatically overpay, which I never want my buyers to do.

I generally see my buyer clients follow the same trajectory, particularly the first time buyers. They start out wide eyed and enthusiastic, and “realistic”. They have read about the crazy market and “know what they are getting into”. They also have a budget number that they will “never go over”. We start seeing houses and find the one, and the excitement is palpable as we get to offer night. Finally the big moment arrives and we start talking numbers, and they come up with their own number, which is comfortable and rational, and of course stands zero chance. We lose big, and the reality starts to set in. A few buyers will stick to their original number and compromise on location or house (2 beds instead of 3, no parking), but most magically come back with a bigger budget. Maybe their parents are willing to kick in, they cash in stocks or sell off an organ, but it is remarkable how a buyer’s number will go up after that initial offer.

On the second offer night things are much different. The buyer is much more aggressive, edgier. They are now willing to look at the highest comparable sale and offer more. They are willing to forego the basement renovation for a year, or go out for dinner less, even put off the vacation. They lose again, but this time it is close, very close. So close it stings, and the crushing disappointment sets in. “There will never be a house like this again”, they say, but of course there will be. There is always another house. And sure enough a couple of weeks later there is, and we are back at the table again. By now the buyer is a hardened veteran, battle scarred, just like the American Marines by the time they stormed Iwo Jima. With steely eyes the buyer tells me the number – no discussion required – and I take it in. Third time is the charm and I get to make the call to my buyer – my favourite part of the job – to tell them they bought a house. Finally. It is not uncommon for people to cry at this point, pop open some Bubbly or just sit in stunned silence. Most buyers will also express relief that this stressful and crazy process is over, and I can’t disagree. I wish things worked differently, for them and for me, but I also know the reward is worth every moment of aggravation. If it was easy everybody would do it.