How can you make sure you come out on top in a bidding war?

Asked by Trulia Phoenix, Phoenix, AZ Fri Apr 19, 2013

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Kawain Payne’s answer
Kawain Payne, Agent, Seal Beach, CA
Tue Apr 23, 2013
I advise my buyers to make THEIR best offer and NEVER engage in bidding wars!

We make our best offer out the gate.

I make sure our offer is supported by comps.

I have won and lost my share of multi offer deals. I can tell you I have won even though my buyer did not offer the highest sales amount, but had better financing than the offer with the higher price.

And of course I have suffered being simply blown out of the water by a buyer with a sales price way above list.

There are too many factors to consider in multi offer situations, to come up with a magic answer for how and why offers get selected.

Some sellers do not want to sale to a big money investor, and prefer a young family to buy their home. Other sellers are looking only at the bottom line.

Let's not forget, some offers get selected because the listing agent wants to work with the selling agent!

Kawain Payne, Realtor
1 vote
, ,
Sat Apr 20, 2013
The buyers who set out to buy ONLY THIS HOUSE are similar to the man or woman who wants to get married in the worst way. They generally do. No, I am not against marriage or buying houses. I am against some spending more than they can afford or spending more than the property is worth.

First find a very good mortgage banker, I would highly recommend me ☺, discuss your loan options, desires, and needs. I ask my clients and prospective clients a series of questions, determine what they are paying now, what they are comfortable making as a payment amount, and what is the maximum amount that my clients and prospective clients can qualify for. Secondly, I communicate this amount to the clients and give the options of house, house, house, house OR home, savings, lifestyle, etc and let them make the decision. A number of mortgage bankers do it this way.

Getting back to your question.... If you are sure this particular house is the house you really want, WITH THE PROFESSIONAL ADVICE OF YOUR REALTOR, determine how much is the absolute highest price you will pay, determine how much you are wanting to pay, and then with your realtor's guidance and assistance, submit your offer. Let the chips fall where they will and buy your house or find the better one that is really the one that you will want because you did not OVER pay or over bid.

I am a Mortgage Banker in metro Phoenix, AZ. I lend in both Arizona and California where I will be pleased to help you. If you or someone you know is looking for financing options, please feel free to contact me or pass along my information. 623-340-0934 Korene Clopine-Seaman NMLS # 218520 We are Direct Lenders, WE CLOSE LOANS!
1 vote
Bianca Benne…, Agent, Glendale, AZ
Wed May 1, 2013
When bidding you want to make sure you pay what makes sense based on the market analyses, and not offer more than is worth.
0 votes
June, Both Buyer And Seller, Phoenix, AZ
Sun Apr 21, 2013
Work with an experienced real estate agent who knows what he's doing. Escalation clauses almost never work, and are a bad idea. Most sellers will not even accept escalation clauses, and you may end up just annoying the seller. Personal letter are also an urban legend, everyone talk about them but they never work. Nobody is going to give up money just because they have a letter from someone saying that they love the house and they are god fearing people... A good real estate agent will not give his trade secrets and best techniques here in Trulia for free. Just work with an expert. This is not a do-it-yourself area.
0 votes
Chris and Mi…, Agent, Glendale, AZ
Sat Apr 20, 2013
Dont forget coming out top in a bidding war is not always the desired result. Once you get emotional about a specific property it becomes easy to overpay. Be sure your realtor has given you an estimate of fair market value and dont allow yourself to bid above this range.
0 votes
Jennie Miller…, Agent, Phoenix, AZ
Sat Apr 20, 2013
Ask your Realtor to help you to structure a strong offer.
0 votes
Tiffany Carl…, Agent, Scottsdale, AZ
Fri Apr 19, 2013
You work with a Real Estate professional who is aggressive, follows up on offers, and writes strong terms. Let me know if you need help. I have great secrets that help my clients win. Tiffany : )
0 votes
Brad Bergami…, Agent, Prescott, AZ
Fri Apr 19, 2013
escalation clauses only work if the seller understands them.
Unfortunately sellers may not like playing the +1,000 game. And most don't trust a buyer that would make a blind bid like that.. I have see Non-refundable earnest money work..
I have seen Love Letters work on occasion.
Most of the time you just need to make sure your agent is presenting the offer in person.
0 votes
Ann Griffin, Agent, Mesa, AZ
Fri Apr 19, 2013
I agree with Don's comments. You can't always be sure, and you don't always want to.

I'd like to add that other things can help because the seller is not obligated to take the highest bidder.

A personal letter to the seller stating why the buyer loves the house has helped clients of mine win without the highest price.

If you are in a situation where you know the house won't appraise, but there's a lot of competition for the house, you can write in the offer that your client will pay a specified amount (say, $1000) above the appraised value, if the house appraises below the sale price. Frankly I'd use both this condition as well as the escalation clause.

Sometimes, you just need to walk away. Who wants to pay $50,000 above market value?
0 votes
Don Tepper, Agent, Burke, VA
Fri Apr 19, 2013
Include an escalation clause in your offer so that your offer automatically rises to slightly exceed any other offer.

That's dangerous, though. Suppose a house is worth $400,000, based on comps. Someone offers $400,000. Your offer rises to $401,000. Now you're overpaying and the house might not appraise for that amount. (OK, it probably will; that isn't much above the comps.) But someone else really loves the house, has a bunch of cash, and makes an offer at $425,000. Your offer immediately rises to $426,000. Now you're definitely overpaying and run a real risk that the house won't appraise for that amount.

You can always put a cap on that escalation clause. But then someone might bid higher than your cap. And so, with that protection, you can't make sure you come out on top.
0 votes
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