There are many articles written on this topic, most more in-depth than mine. I tend to not state the obvious like "get pre-approved" or "research the Neighbourhood". Instead, what I propose are ideas that will help you succeed once you've attended to the basics.
Here are some tidbits from Carl LOFTschimidt.
Rule #1. Don’t bid unless you can win.
Whenever I find myself holding a first-time home buyer’s hand in a bidding war, I start off explaining the situation with my "Auction Analogy.” Everybody knows that when an auctioneer starts the bidding at $5,000, four people raise their hands and the price goes up. I use this analogy because surprisingly, there are always buyers who enter a bidding war only to offer the asking price. Not only is it a pointless exercise, but it can hurt them down the road as the next comparable listing in the building or neighbourhood will use this recent sale price to set their listing price—so don’t bid up the price if you’re not serious about winning, otherwise, you will end up shooting yourself in the foot.
Rule #2. Hire a Specialist, forget your family friend Realtor.
When my folks purchased a cottage, I referred them to a local pro. I could have easily driven them around and drafted an offer, but I know I am not the best agent to help them buy a cottage. Here’s why.
There are 2 types of Realtors: Specialists and Generalists. In laymen’s terms, there are agents who know a particular market inside out, and there are taxi drivers with a real estate license. Hiring a specialist will give you an edge. The instincts and experience from a local pro cannot be understated. If your realtor has never seen or inspected any sales comparable to the property you want, you will truly be entering a blind bidding war. On the other hand, a local pro will know the value of a house without even looking at the price tag. He or she will tell you why this house is nicer than the last comparable sale, why it has attracted more attention, and what the they think it will sell for based on these features. Your family-friend-generalist-realtor will probably count the number of bids and suggest $50,000 per bid or something to that effect. In all seriousness, that’s usually how generalist agents operate and often blow their client’s brains out. BTW if your realtor specializes in "Toronto" he's a generalist, a true specialist will focus on a couple neighbourhoods or product type(Duplex's, Lofts ect.)
Rule #3. $10,000 is not a lot of money.
Entering a bidding war can often feel like a high-stakes poker game. In my time, I have seen far too many buyers lose a bidding war by a couple thousand, and, in some sad cases, even a few hundred dollars. If a seller has given you an opportunity to improve your offer because you’re neck and neck with another buyer, don’t be afraid to raise the ante by $10,000. No seller likes to pick a winner over small margin. Offering an extra $10,000 is not a bad idea, especially if you’re tired of searching and love the home or Toronto loft. Consider this: last year, downtown Toronto Condo prices increased 4.1%. This would mean $10,000 is only 6 months of appreciation on a $500,000 condo. If it’s a rare layout or unique toy factory loft, you could easily spend 6 months waiting for the next place, so don’t feel bad if your realtors suggest adding $10,000 to the offer. A smaller bid may leave you with regrets.
Rule #4: Don't chase stupid Money.
Some people have more money than brains. Don't get caught up in the bidding and lose perspective. If your offer is breaking a record by a massive margin ask yourself what the chances are of a similar listing hitting the market in the next month or 2. Remember there are plenty of fish in the sea.