How to Help Buyers Beat Out the Competition
July 30, 2013
With home buyers finding themselves in bidding wars all over the country, how can you help make sure they aren’t outbid every time?
In 18 states, 69 percent of homes on the market fielded multiple offers in June, according to real estate brokerage Redfin. Bidding wars are reportedly most common for bargain-priced homes where home buyers are competing with investors.
The Wall Street Journal recently highlighted some of the following tips for buyers who want to win a bidding war without overpaying.
Don’t lowball an offer: “Make sure your initial bid isn’t insulting,” The Wall Street Journal reports. Syd Leibovitch, president of Rodeo Realty in Los Angeles, advises his clients to submit their maximum bid first rather than try to base their offer on what they think other buyers will do. He says clients too often lose a home to a higher bidder when they were willing to pay a higher price from the beginning.
Set a “walkaway number”: At the beginning of their real estate search, have your buyers pick the number that is their absolute maximum. This will help them avoid getting caught up in the competition if they face a bidding war. This maximum limit should include the amount they can get from a lender, plus some extra cushion. That will ensure they are taking into account insurance, taxes, and other costs of home ownership.
Be flexible: Being flexible — such as negotiating closing dates or offering a “rent back” to sellers — can help set your buyers apart.
Get prequalified: If your buyers need financing for their home purchase, they need to know how much a lender is willing to give them. Getting prequalified shows that a buyer has the ability to close.
Be the backup: If your buyer loses out in a bidding war, you can still communicate to the seller that the buyer is still interested in purchasing the house — even if another bid has been accepted. A transaction can fall through in the final hours, which would allow your buyer to step in.
Source: “How to Win a Bidding War,” The Wall Street Journal (July 27, 2013) [Log in required]
Updated: August 13, 2020