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A good realtor is one of the best ways to make sure you make the lowest possible bid while still getting the home you want. They’ll earn their commissions by never revealing your maximum bid, setting firm but fair deadlines on your offers, and maybe even tossing out a quick-to-expire “bully offer” to try to pressure the seller into a quick sale. And it never hurts to pull on those heartstrings by writing the seller a letter.
Table of contents
Before you bid, know your real budget
Get mortgage pre-approval and cash ready
What a home offer includes besides price
How bidding wars work in real life
How to negotiate on a house
How negotiating after inspection usually works
What happens after your offer is accepted
How to write a good offer letter
Frequently asked questions (FAQ) about bidding on a house
Before you bid, know your real budget
Get mortgage pre-approval and cash ready
What a home offer includes besides price
How bidding wars work in real life
How to negotiate on a house
How negotiating after inspection usually works
What happens after your offer is accepted
How to write a good offer letter
Frequently asked questions (FAQ) about bidding on a house
Welcome to a high-stakes phase of shopping for your new home. You may find yourself discussing large numbers and adjusting offers by thousands of dollars, which can feel unfamiliar if you haven't bought a home before.
The rules of engagement vary by city and province, but what they all have in common is a near total lack of visibility into what kind of offers the seller has in front of them. You won't really know anything, and they don't have to tell you.
This is the phase where an experienced real estate agent can be especially helpful. "They will be the ones to really dig in, get into the situation, and ascertain what's happening," says Khalid Ebrahim, a veteran real estate agent and principal broker.
While the highest number usually wins, you won't know what the competition is offering. This guide explains what to prepare before you bid, how the offer process works, and strategies that can help you stay competitive without paying more than you can afford.
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Before you bid, know your real budget
Your real budget is the maximum home price that lets you pay your mortgage, property taxes, repairs, and living expenses comfortably — not just the maximum a lender will approve. Calculate your monthly cash flow, factor in all ownership costs, and write down that hard ceiling. When bidding pressure hits and you're tempted to add another $10,000, that number keeps you grounded.
Get mortgage pre-approval and cash ready
A mortgage pre-approval proves to sellers you're a serious buyer with actual financing lined up. It also locks in an interest rate for 90 to 120 days and clarifies how much mortgage you can afford.
Beyond pre-approval, you need liquid cash ready for:
Deposit: Typically due within 24 hours of acceptance (often around 5% of the purchase price).
Deposit: Typically due within 24 hours of acceptance (often around 5% of the purchase price).
Closing costs: Legal fees, land transfer taxes, and other expenses due on closing day.
Closing costs: Legal fees, land transfer taxes, and other expenses due on closing day.
Access to funds: Ensure your deposit and closing funds are liquid (for example, move money from investments into a chequing account before you start bidding). Here's more on how to save for a house.
Access to funds: Ensure your deposit and closing funds are liquid (for example, move money from investments into a chequing account before you start bidding). Here's more on how to save for a house.
What a home offer includes besides price
While the dollar amount gets all the glory, a real estate offer is actually a package deal. Sellers evaluate your entire offer, not just the price.
A standard home offer includes:
Purchase price: The amount you're willing to pay.
Purchase price: The amount you're willing to pay.
Closing date: The date you take possession (matching the seller's timeline can help).
Closing date: The date you take possession (matching the seller's timeline can help).
Deposit amount: The amount you'll provide upfront.
Deposit amount: The amount you'll provide upfront.
Inclusions and exclusions: What stays (for example, appliances and fixtures) and what the seller takes.
Inclusions and exclusions: What stays (for example, appliances and fixtures) and what the seller takes.
Conditions: Safeguards (such as financing approval or a home inspection) that allow you to withdraw under certain circumstances.
Conditions: Safeguards (such as financing approval or a home inspection) that allow you to withdraw under certain circumstances.
How bidding wars work in real life
In many Canadian markets, bidding wars operate through a blind bidding system. This means if there are five offers on a house, you have no idea what the other four people are offering. You don't know the price, conditions, or closing date in the other offers.
The seller's agent will usually set a specific day and time to review all offers. Your agent will submit your bid, and then you wait. The seller can accept an offer outright, reject them all, or send the top few bidders back to improve their offers — which is exactly why knowing your walk-away number is so critical.
How to negotiate on a house
Escalation clause: You make an opening bid but commit to automatically beating competing offers by a set amount, up to your maximum. For instance, you might offer $500,000 but agree to beat any higher bid by $5,000, up to $600,000.
The risk? You may be revealing your maximum budget. The seller's agent might shop your ceiling to other bidders and take you straight to your maximum. But if rival bidders use escalation clauses and you don't, you might lose without ever making your strongest offer.
Commission discount: Your buyer's agent reduces their fee to make your offer more attractive to the seller. Since the seller pays the commission, a lower agent fee means they pay less overall.
In some jurisdictions, commission discounts must be disclosed. If a rival's agent offers a discount, your agent can match it or you can increase your purchase price to stay competitive.
Irrevocable period: The time window during which your offer remains valid. If the seller doesn't accept within that period, your offer expires. A rival bidder with a short irrevocable period (say, 24 hours) might force the seller to decide quickly, potentially cutting you out of negotiations.
Bully offer: An aggressive offer with an extremely short irrevocable period — sometimes 30 minutes to 2 hours. It's a take-it-or-leave-it approach that may work if the terms are strong enough for the seller to accept immediately.
Presale visits: Standard offers include 1 to 3 property visits before closing (contractor walkthroughs, measurements, etc.). If the house is occupied, requesting many visits can annoy the seller.
Time-to-close: The period between accepted offer and closing day when you get the keys. Standard is 30 to 60 days, but flexibility here can make your offer more attractive if it matches the seller's timeline.
Offer conditions: These are safety nets that let you back out if certain requirements aren't met. Common conditions include:
Financing condition: Your offer depends on securing mortgage approval. If you can't get financing, the deal dies and you get your deposit back.
Financing condition: Your offer depends on securing mortgage approval. If you can't get financing, the deal dies and you get your deposit back.
Home inspection condition: You hire an inspector to check for issues (plumbing, electrical, structural). If problems arise, you can renegotiate or walk away.
Home inspection condition: You hire an inspector to check for issues (plumbing, electrical, structural). If problems arise, you can renegotiate or walk away.
Sale of current property: Your offer is conditional on selling your existing home within a set timeframe (often 30 to 60 days).
Sale of current property: Your offer is conditional on selling your existing home within a set timeframe (often 30 to 60 days).
The catch: fewer conditions can make an offer more attractive because they provide more certainty for the seller. Many agents still recommend keeping a home inspection condition where possible, even though offers with fewer conditions may be more competitive in some markets.
Want an example? Say there are two offers: yours at $950,000, another at $1 million. As Ebrahim explains: "You might say, 'I can't come up to a million, but I'm removing all my conditions. My offer is guaranteed the second you sign off.'" You win, and the higher offer loses.
Remember, though: conditions are safety nets. Remove them and you're on your own, no matter the eventual price.
Committed deposit: A serious buyer provides a deposit within 24 hours of acceptance (often 5% of the purchase price). Larger deposits signal commitment. This money becomes part of your down payment once conditions are met.
How negotiating after inspection usually works
If your inspection uncovers issues (failing roof, outdated wiring, foundation cracks), you have three options:
Ask the seller to fix it: Request repairs before closing.
Ask the seller to fix it: Request repairs before closing.
Negotiate a price reduction: Request a lower purchase price to cover repair costs.
Negotiate a price reduction: Request a lower purchase price to cover repair costs.
Walk away: Use your inspection condition to withdraw if the issue is a dealbreaker and the seller won't negotiate.
Walk away: Use your inspection condition to withdraw if the issue is a dealbreaker and the seller won't negotiate.
Keep in mind: in competitive markets, sellers are less likely to negotiate after inspection.
What happens after your offer is accepted
Once your offer is accepted, here's what happens next:
Deliver your deposit: Deposit funds are typically due within 24 hours of acceptance.
Deliver your deposit: Deposit funds are typically due within 24 hours of acceptance.
Fulfil conditions: Arrange financing approval and complete the home inspection, if these conditions apply.
Fulfil conditions: Arrange financing approval and complete the home inspection, if these conditions apply.
Remove conditions: Once conditions are satisfied, your agent submits a waiver and the deal becomes firm.
Remove conditions: Once conditions are satisfied, your agent submits a waiver and the deal becomes firm.
Sign final paperwork: Meet with your real estate lawyer to complete the legal documents.
Sign final paperwork: Meet with your real estate lawyer to complete the legal documents.
Close: On closing day, you receive the keys and take possession.
Close: On closing day, you receive the keys and take possession.
How to write a good offer letter
Some buyers choose to include a personal letter in the hope of helping their offer stand out, though how much it influences outcomes can vary. Ebrahim, for instance, says these letters have the potential to backfire.
They may come across as overly personal or persuasive, or they could unintentionally include details that don't resonate with the seller (for example, highlighting lifestyle details that may not align with the seller's preferences). But many buyers swear by the personal note. If you're among them, here's a handy template to get you started.
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Frequently asked questions (FAQ) about bidding on a house
What are common mistakes when bidding on a house?
The biggest mistakes are bidding beyond your budget, waiving critical conditions like home inspection or financing, and ignoring whether your closing date works for the seller.
Should you remove conditions to win a bidding war?
Removing conditions makes your offer more attractive but carries serious risk — if financing falls through or inspection reveals issues, you're fully liable. Always consult your agent and lawyer before waiving safety nets.
How much deposit do you need when making an offer?
A standard deposit is around 5% of the purchase price, which signals seriousness to the seller and becomes part of your down payment at closing.
Can you back out after your offer is accepted?
Yes, if you can't fulfil your conditions (like securing financing), you can walk away and get your deposit back. If your offer is firm or conditions are waived, backing out means losing your deposit and potential legal action from the seller.
What is the 20/30/3 rule for home buying?
Put down 20%, keep monthly housing costs under 30% of gross income, and buy a home costing no more than 3 times your annual salary.
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