Real estate seems to be out of control lately. In the sweltering real estate market, homes are selling for up to six figures below the asking price. When the housing market is so aggressive, knowing the ins and outs of the real estate bidding wars can help you make an offer that the seller won’t turn down.
Start with a real estate agent who is expert in your local market and prioritizes finding your home over pressure to spend money. The right agent can provide insight into the nuances of your location, ensuring that your bids are competitive without overspending.
Here’s what to do – and what not to do – if you want to win a bid on your future home.
Related: 4 Crucial Things to Know When Pricing Your Home for Sale in Today’s Fluctuating Market
Do you offer your best offer?
In the real estate bidding war, agents will advise you to submit your best final bid. The seller is not likely to negotiate when there are other offers on the table. Make sure your bid is the highest you can reach, and you don’t mind losing out if the house sells for a dollar more than you bid. You won’t know other bidding costs, but the sale price will be available once the deal is closed.
Don’t put too much weight on the price list.
Just because the list price is in your budget doesn’t mean the sale price will be. Nationwide, buyers pay 1 to 3 percent on the average list price. This does not take into account cities like Seattle or Austin, where every home receives an incredible response from potential buyers once it enters the market.
According to Linda Baddour of Bramlett Residential Real Estate, company data shows that bids 15 to 16 percent above list price have been won in their Texas area. But with the ebb and flow of the market, these numbers can change.
Be prepared to compromise in emergency situations.
When the competition in real estate is fierce, you will likely have to enter into a deal with very few or no contingencies, or warnings that you can back out of the deal without breach of contract.
Your competitive bid could mean waiving things like home inspection, home sale contingencies, and more. New home problems are less likely, but older property may require some work that a home inspection usually reveals. If you’re aware of the possibilities before you compromise on contingencies from the start, you’ll be more prepared emotionally, mentally, and financially before you make your offer.
Don’t assume the highest bid will win.
Yes, you need to make a solid bid, but sellers may want more than just a high dollar number. Quick closing and possession, fewer contingencies, a free leaseback term, a short option period, or even a personal letter to the seller (the latter may or may not be read) can make a buyer stand out. As long as you offer a competitive amount, these extras could seal the deal.
Related: How will higher mortgage rates and inflation affect homebuyers this year?
Don’t try to time your show.
There is no universally perfect time to bid on real estate, according to Brad Polley of Pauly Presley Realty, who says each deal has its own circumstances. Typically, though, the menu goes to market on Thursday or Friday, viewing takes place over the weekend, and all shows must be on a Monday due date.
Pauly explains that the seller has the right to accept any offer at any time, even before the Monday deadline — so it pays to see if he has the motivation to move quickly. Some listing agents provide more information than others, which helps buying agents advise their clients on the best time to bid.
Don’t forget to do your research.
If a home looks too good to be true in this market, it probably isn’t worth bidding on. If you’re interested in local real estate, you’ll likely learn about trends in how square feet, age, type of dwelling, and more factors affect your listing price. When you notice a listing that doesn’t match the current market price, there’s usually a reason for it: cosmetic fixes, a suspicious registry, or extras that don’t live up to the code. No matter how much you want to buy, make sure you are bidding to buy a home that is safe and meets your needs.
Not attached there.
The current real estate landscape can be very depressing. Buyers can expect to spend a lot of time looking at listings, rushing to view, and investing in a property just to lose it in the bidding war.
Your agent will help you understand how close your bids are to winning bids, and you can use this information to help you with your search. Keep at it and eventually things will work out, but taking a short break from researching if you need it can help. When you go back to your search, don’t lose hope that the house you end up in is the right fit for you.