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Wednesday, September 12, 2012
5 Ways to Beat the Competition in a Bidding War
As the real estate market starts to
pick up in many parts of the country, real estate agents from small
towns to the big cities are blogging, tweeting, ranting and raving about
A seller’s asking price is just that: an asking price. The seller may choose
to price their home above, at or well below what the actual market will bear.
Then, with luck, come the offers from buyers.
Sometimes, there are multiple offers all under the asking price. Other times,
all offers come in right around the asking price. But in some situations, there are more than six offers coming in over asking
price. Depending on where you live, you, as a potential buyer, may be forced to
compete with other buyers in a bidding war. Here are five steps you can take to
beat the competition in a multiple-offer situation.
Hire a good local agent In most communities, 80% of the business is done by 20% of the agents. These
agents are experienced in the local market and have relationships with other
agents as well as inspectors, contractors, mortgage brokers and appraisers. More than
anything, these 20% of agents “get” it. A seller is looking for a sure thing and a smooth, clean escrow. With
stakes high, who wouldn’t want a sure thing? In fact, the last thing the seller
(or their agent) wants is to enter into escrow with an inexperienced or
That’s why, when faced with multiple offers, a seller, guided by their agent,
may choose to work with a lower-priced offer because that buyer has a good
agent. Many times, a lower priced offer will be countered up to match the price
of a buyer with an unknown agent.
Get your financial ducks in a row before making an offer Before you can make a strong and winning offer, you need to have your
finances in order. This means being pre-approved for a loan and
staying in regular contact with your lender or
mortgage broker. Have an auto email alert set up from your real estate agent’s
MLS. Know the new listings as they hit the market and be prepared to visit them
right away. Be ready to make a move when the right house comes along. An informed buyer has been in the market for some time. They’ve seen multiple
properties, either at open houses or private appointments. They come to the
multiple-offer situation fully prepared, knowledgeable of the market and ready
to present themselves as a strong, motivated buyer. The seller and their agent
will appreciate that.
Don’t wait Many times, a new listing is sold before the first open house. If a desirable
property hits the MLS on a Tuesday, you need to see it Tuesday night or
Wednesday morning. As agents tell sellers all the time, your
first buyer is likely your best buyer. The
buyers who don’t rest on their laurels get the home. They show that they are on
it, they’re motivated and they really want the property. This often translates
into a successful deal or smooth escrow for the seller and the listing agent. If you’re serious about buying and have your financial ducks in a row, don’t
wait for the open house. As soon as you see the listing, let your agent know
you’re interested or have them start doing the research.
Make a ‘clean’ offer There’s an assumption that the successful bidder simply pays the most money.
But this isn’t usually the case. While price is a huge factor, the terms and
conditions are as important, if not more so. To make your bid the most compelling, be as flexible as possible to the
seller’s needs. If you know the seller needs a quick escrow because they just
bought a place, give it to them. If they just had a baby and need some extra
time, go with a longer close or offer to close quickly but give them a
“rent-back.” If you’re going to have inspections, check with the inspector and
see if you can get an appointment soon after getting your offer accepted. That
way you can remove your inspection contingency quicker.
The same holds true with an appraisal. If your lender is able to pre-schedule
an appraisal or at least check their schedule, it can only help. The last thing
a seller wants is to accept an offer, only to wait 14 or 21 days to discover the
buyer can’t get a loan or the leaky roof scared them away. Make your offer clean
with swift timeframes for contingencies. There have been times when a seller
leaves 2 to 3 percent on the table; just to be sure the deal will close
Present yourself in the best possible light Presentation can’t be emphasized enough. Make sure your agent presents your
offer to the seller in a professional way. The offer should, when possible, be
presented in person. A contract should be typed, not handwritten. Without a
doubt, a pre-approval letter from your bank or broker should be attached to the
offer. A cover letter from you or your agent presenting you, as buyers, to the
sellers should always accompany your offer. If there are disclosures presented
to you prior to your making an offer, sign off on them. Make it clear to the
seller that you’re serious, motivated and ready to move ahead should they choose
to work with you.
Strong and clean is the way to go It’s the common sense stuff that will help differentiate you from the pack.
Be up front, show that you’re motivated and look at the big picture of your
offer — not just the dollar amount. Of course, many times the highest bidder wins. But every day, there are
dozens of buyers who kick themselves because they would have paid the price that
it took to win the bidding war. Presenting yourself and your offer in the
strongest and most clean way will go a long way to assuring you come out on
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