They’re back… Bidding Wars

Multiple offers are happening left and right. Here’s how to survive them:

Sellers:

The highest offer isn’t always the best offer. While it might be tempting to accept the highest bid, you need to take into consideration: contingencies (such as inspection, appraisal and financing), closing date, and the end user (is this someone who will be living in your house, tearing it down, or an investor?). What is the buyer’s ability to close? Do your best to choose the right buyer, not the richest buyer.
Don’t dawdle. If an offer is attractive, respond quickly. And once you both agree to the terms, get it signed quickly. Before they move on to the next shiny object!
Keep your objectives in mind. If suddenly your $500K house is getting multiple offers shooting it up to the $525K range, make sure that you choose the offer that is going to stick (see step #1). Don’t get too greedy, and remember to stick to your game plan. If it works out, be happy!
Getting multiple bids doesn’t always mean that you are in the drivers seat. Remember, it’s a negotiation, and you want both sides to emerge relatively happy from the transaction. I recently worked with a buyer who was interested in two different properties. When Property #1 started insisting on terms that would benefit only the seller, my buyer jumped ship. They went with Property #2 who bent over backwards to make them feel like they were part of the negotiations- with a little give and take. Avoid ultimatums or power grabs. It can backfire on you.

Buyers:

If you know you’re entering into a multiple bid situation, start with a strong offer. Now is not the time to bring in a low ball offer. It’s a waste of everyone’s time. If you are afraid of over paying, consider an escalation clause.
Earnest money deposits can make a difference… emotionally. Even thought it’s difficult as a seller to have access to the deposit (if things go awry), a larger deposit signals seriousness on the part of the buyer. In our market place, 5-10% earnest money deposits are not uncommon.
Get pre-approved on your loan. Get it in writing. Share it with your agent before you go house hunting.
Have your agent find out what’s important to the seller. Do they need to move by a certain date? Are they looking for flexibility or a possible rent back? Might they accept a lower offer in exchange for an as-is offer or an all cash offer? Do some sleuthing.
Keep it clean… Waive contingencies! If it’s competitive, you might consider having the home pre-inspected so you can go in as-is. Do you have enough cash in the bank to stomach a low appraisal? You might consider waiving it for the right place. Discuss strategies with your agent.

In any bidding war, it’s good to be prepared and find an edge over the competition. After all, your aim is to succeed.

Call me if you can use some help!

posted by Marcie Sandalow

This entry was posted on Wednesday, May 30th, 2012 at 2:55 pm and is filed under Information for Buyers, Information for Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.