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Bidding War Strategy: what is the best approach to winning a real estate bidding war?

Asked by Trulia San Francisco, San Francisco, CA Tue Feb 19, 2013

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The Eric Turner Team’s answer
The best approach to winning a real estate bidding war is having an excellent agent who understands the market and can both provide strong and effective advice to their client and who knows the questions to ask and way to find out what it will take to get the deal done. There are so many nuances to making an offer that extend beyond the basic terms of the contract. The benefit to a cash buyer is not in the way they are delivering funds, but in the ability to make an offer without several of the typical contingencies that a Buyer with traditional financing must have in place to be protected.
0 votes Thank Flag Link Sun Mar 3, 2013
BEST ANSWER
The best approach is unfortunately not available to most people - and that's to buy with cash. Everything else comes secondary from the perspective of the seller and listing agent.

This is hard to answer because every seller is different...some are looking for the top price, others are looking for the strongest cash position, still others care more about particular time frames and conditions.

Bidding wars are unfortunately here again and all too often, the first time buyers with FHA and VA loans are getting shut out.
1 vote Thank Flag Link Tue Feb 19, 2013
Put as much earnest money as you can and make your contract as clean as possible by removing the contingencies.
Flag Wed Apr 29, 2015
Put yourself in the seller's shoes. They want to cleanest, best overall offer.

How bad do you as the buyer want the home? Is this a long term investment? Do you see this as being your "forever" home? What life events would cause you the sell the home?

All questions to ask yourself before putting together your offer.

That said, a seller wants the best price possible. So the highest purchase price will be the first thing their attention is drawn to. Next is the terms of the offer - is it an all cash offer? That is the most preferable. Is it financed? If so, is it within a 30 day time frame? If it is financed, does the buyer have a substantial down payment, preferable even more then the general 20%?

Are they offering us any sort of credit - maybe a free 30 day rent back?

Sellers want the best overall offer - IE the best combination when it comes to the price, the terms, the time frame, and the liklihood it will all work out just fine. No seller wants to work with a buyer who has backed out of 3 properties or who has a strategy of re-negotiating on inspections ...
1 vote Thank Flag Link Wed Apr 29, 2015
Bid higher than the other people bidding. Also, have your REALTOR write a personal note to the owners explaining your situation. If possible put some tear drops on the personalized note.
1 vote Thank Flag Link Tue Feb 26, 2013
The best, cleanest offer is all cash with no contingencies. This offers the seller no hassles and a quick close. In many cases a seller will take a lower all cash offer with no contingencies over a higher offer that involves a loan. After 8/1/2015, cash offers will have an even larger advantage over offers with loans.

The second best way to win a bidding war is to listen to your agent. Every week during our office meeting we discuss "the deals we missed" and the common refrain on the buy side is "they didn't listen to me". Agents know the market and know what it is going to take to win a deal with what you have to offer. Listen to your agent.

The flip side of that is that as agents we have to do a good job of getting our clients educated on the market conditions and to understand why they should do x, y, or z. While there are some people who are going to insist on doing everything their own way, regardless of a preponderance of evidence to the contrary, I generally view the "they didn't listen to me" comments as a failure on the part of the agent.
0 votes Thank Flag Link Fri Jun 5, 2015
What happens 8/1/2015?
Flag Sat Jun 6, 2015
Hi,

Well, there are several, but each situation is unique. For example, some sellers may want a free rentback, long close, etc.

1) Ask what the seller is looking for in addition to a top price (free rentback, etc.)
2) Run your comparables to see where the area offers are heading
3) Write a clean offer
4) Communicate with the listing agent about expectations on things such as contingency length

Kind regards,

Arpad
0 votes Thank Flag Link Wed Apr 29, 2015
Winning in a multiple offer situation is not easy. Here are few tidbits of advice for standing out.

1. Offering a competitive price. This is obvious, not every buyer is well coached on this. Study the comps with your agent and keep in mind that in a low inventory market, many new listings become the "new comp" for the neighborhood. Always offer a price where you're either happy to pay it, or lose to someone who will pay more.

2. Sign the disclosure package. This makes your offer stronger and shows commitment.

3. Do your inspections before making your offer. Not having an inspection contingency is a surefire way to make your offer stand out.

4. If you are not paying cash, be sure to go all the way through underwriting when getting pre-approved for a mortgage. This allows you to write a cleaner offer and showcases your ability to close the transaction.

5. Write a letter to the seller. This doesn't always work, but sometimes it helps. If you are in a competitive situation, you might as well give it your all.
0 votes Thank Flag Link Mon Mar 16, 2015
You simply have to put in a bid above the asking price. If you can ask questions about the other bidders, find out information about them and price accordingly. Good luck. Call or email for a free pre-approval and free credit report.

We can do: FHA, Conventional, USDA, VA, HARP, Interest Only, Home Equity, Fixed, and Variable. Find out which product is right for you by calling Brad at (855) 415-5626.

Brad Neumann
Sr. Loan Officer
Crosscountry Mortgage Inc.
Toll Free: (855) 415-5626 ext. 5734
Email: bneumann@myccmortgage.com
NMLS# 948036
0 votes Thank Flag Link Sat Oct 26, 2013
Make an offer that presents the greatest value to the seller.
That is not always cash.
It's not always the hightest price.
Some will alllow months to pass to accomidate the offer that embraces what they, the seller, values most.
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With such limited information as suggested by the question, one must make assumptions and respond based on these assumptions. Reality is so much differant.
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You win the bidding war by not engaging in it, and making the CORRECT value offer.
The details are worth paying for.
0 votes Thank Flag Link Fri Sep 27, 2013
Quick closing and NO contingincies.
0 votes Thank Flag Link Fri Sep 27, 2013
Cash and highest is not always the best in the world of foreclosures. Yes, the bank looks a net to them just like any other seller, but how you arrive at it can and does make a difference.
You want termite inspection and treatment and the bank or seller paying for it - comes from sellers bottom line, but also a delay in closing period. Want septic system or well inspected - time is money to the seller/bank.
If both a cash and financed offer are exactly same terms - cash will many times speak a little louder, but I am noticing banks are wanting higher earnest money and per diem from cash buyers.
The cleaner the deal - in any home transaction - the better.
0 votes Thank Flag Link Thu Sep 26, 2013
Cash is king! Sorry to say but an all-cash deal usually wins...... I would never suggest a buyer waive all inspections, especially buyers new to San Francisco.

Cheers,

Sally
0 votes Thank Flag Link Wed Feb 27, 2013
The best way to win is to buy all cash. Another way to win if you are coming in FHA is to put together a complete packet for the seller. This should include a detailed list of everything you are paying for. (sometimes paying for some of the seller costs and having the loan agent work it into your loan can be an option.) show the seller that you are a strong qualified buyer. Provide a letter from the buyer stating his interest in the property. Include all loan info including agent and a letter of pre approval. Also tell your loan agent to call as well. This will show you are completely serious and re assure the seller you can close quickly. If your packet is complete with all the bells and whistles, when the seller reviews it he will know without a doubt you are truthful and ready to buy. Good Luck!
0 votes Thank Flag Link Tue Feb 26, 2013
Oh the bidding war!

First of all I encourage my clients to make their best and final offer from the start. If their best is not godd enough , I urge them to be prepared to move on.

Some thins can be done to make an offer stand out in the crowd are:

1. Shorten alll contengency periods

2. Have your agent write a letter on buyer's behalf, one that will personalize the buyer to the seller.

3. Give your lender permission to convey/release information regarding the status of your loan approval process to the listing agent. This permission should be in writting. Make sure and submitt copy of the written permission with your offer.

4. Use conventional financing, if the buyer can. Some sellers will give more weight to an offer with conventional financing vs. FHA financing.

5. Buyer should have a down payment, sellers will favor an offer with a buyer with a down payment.


Kawain Payne, Realtor
0 votes Thank Flag Link Tue Feb 26, 2013
Bad counsel. Your notion of making a 'best and highest' offer up front is imposing a one-size-fits-all approach to home buying which will result in many buyers paying too much and feeling duped when they realize they paid more, sometimes significantly more, than they needed to. The other flaw is the assumption that a buyer's 'best and highest' is an absolute number. A person's 'highest' while offering without competition will be lower than when multiple offers on a property are present, it's human psychology. Unless a buyer is incredibly disciplined and emotionally detached (extremely rare), the highest offer will be relative number based on the specific circumstances of the negotiation.

I'm assuming you're a listing agent. If not, you'd make a good one.
Flag Thu Apr 24, 2014
I wrote about this in the last smoking hot market:
http://blog.sfishome.com/uncategorized/secrets-to-getting-lo…
Web Reference: http://blog.SFisHOME.com
0 votes Thank Flag Link Tue Feb 19, 2013
Cash makes it much easier because there is no loan or appraisal contingencies, but a very strong down payment coupled with a very good agent helps. I would also suggest the buyers writing a letter to the sellers and if they had a picture even better.

99% of the time it comes down to price, but there are occations where the above works.

Good question, if we knew we could always get our offers accepted everytime we could bottle it and sell it for a fortune:)

Best,

Tap
http://www.DavidTapper.com
http://www.TeamTapper.com
0 votes Thank Flag Link Tue Feb 19, 2013
Make the highest offer you can. As a listing agent, I don't give any advantage for cash if the buyer is well qualified. It's all about the bottom line on closing day.
0 votes Thank Flag Link Tue Feb 19, 2013
Having the best agent/broker there is. In competitive offer situations who is representing the buyer and how they present the offer can be just as important as price and terms.
0 votes Thank Flag Link Tue Feb 19, 2013
Offer your highest and best. Usually all-cash offers have the upper hand. If you have to finance see what you can do to minimize your contingencies (i.e. decrease your inspection and loan times).
0 votes Thank Flag Link Tue Feb 19, 2013
The most effective is blow everyone else away! Is that the "best"? That would be up to the buyer.
0 votes Thank Flag Link Tue Feb 19, 2013
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
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