Maybe a better way to think about the term "bidding war" would be to consider that our market is very competitive with aggressive buyers and smart sellers. To beat out other buyers, an offer is not only price, but it's also the terms/conditions, how your offer is presented and the information included with and in your offer.
Please consider the following to make stronger offer:
- loan approval from direct endorsement lender vs. mortgage broker
- solo LSR vs. stronger proof of loan qualifications
- amount of earnest money deposit (EMD) : $500 vs 1-3% of purchase price
- proof of your financial status vs. no proof
- market value offer vs. trying to get a better deal
- etc., etc., etc.
- using Exclusive Buyer's Agent vs.going solo or with non Exclusive Buyer's Agent
PAUL WELDEN PLLC
Exclusive Buyer's Agent
This would be a very rare case in today's market here in Green Valley. We have large selection of homes to choose from at low prices. We are still in a buyer's market. This makes it a Great Time to buy a home here in Green Valley.
You could make an offer and stick with it as a backup plan. Do not overpay or feel pressured to pay more to win.
I still say staying home is the only winning move in this game.
Bidding war or not, you need to approach a home purchase in a very pragmatic manner. Establish from the get go what you can afford, and if you plan to finance, make sure your have a loan status report (LSR) from your lender, before you place an offer. This alone will put you ahead of the game when it comes time to make an offer.
Once you find the house you want to buy, have your agent run the market comps for you. With this in hand you know if a bidding war erupts when to stop. There is never a good reason for paying more than the market value--what's more if you are financing your lender will not lend your more than the appraised value. So if you do win a bidding war that goes over market value, you are going to have to dig deeper into your pockets to come up with the difference between what you bid and the appraised value.
When in a bidding war your best bet is to always go in with your best offer and remember it isn't always the highest offer that wins. Many times an attractive close date and a cash offer will trump a high lender financed deal.
If you have any further questions or would like to know the value of a property you may be interested in, you may visit me on my website: http://www.greenvalleyazrealestate.com or give me a call at 520-241-7780.
The best way to win a "bidding war" isn't necessarily to achieve getting the home at the highest price but getting the home at a price that truly reflects the local real estate market activity.
By knowing and understanding the market, it's possible to win even though you do not get the home.....by not over paying!
Pricing a home artificially low, while irksome to many, is, in fact, a "selling strategy" and works effectively well in communities where the homes are easily recognized to be worth more than the listing price. Exciting buyers to purchase is one of the reasons that buyers enter the "bidding frenzy" of not just "buying" the home, but "winning" it! It is the reason that auctions do so well, and why, as I saw in a "Nova" special on PBS recently, that buyers would pay $28 for an ordinary $20 bill--the goal was no longer getting the $20 bill for a value or under the value, but "winning" the bill.
As with all situations in which many buyers want the same thing, the only way to beat out everyone is to be the buyer with the "strongest offer." In many cases, "strength" of an offer is determined as one that has the highest price, the least amount of contingencies, and the most flexibility in terms of conditions. However, I would always caution that unless this is the "exact", "perfect", "house of your dreams" home, I would not be caught up in the buying frenzy that accompanies most multi-bid scenarios. Smart buyers purchase a home at or around the market value, and exercise the contingencies necessary to protect themselves in the event the home does not meet condition or loan requirements.
Remember, unless you are a cash buyer, any home requiring a loan must be appraised, and if the buyer has "overbid" the price of the home, it may be necessary for the buyer to make-up the difference between the appraisal and purchase price to get the loan--no mean feat if the buyer has already offered as much as he or she can afford.
To buy this or any house (whether a multiple bid or single bid offer environment), work with a qualified agent to review the comparables for the area, and calculate the price that is both affordable for you, as well commensurate to the market in the area.
Grace Morioka, SRES
Area Pro Realty
San Jose, CA
I would take myself out of the war mode and look at it in a more practical way. Look up the comps in the area, establish a value and be real about how much you want the house and how much you can spend or afford. If you can't live without the house bid your max...! If you like it but, it wouldn't kill you to loose it, you probably want to be somewhere inbetween. As a rule the person who wants it more will win because they will always bid their max...! Good Luck...