5 Tips to Winning a Bidding War in a Seller’s Market
Like it or not it’s a seller’s market again, in many areas and price ranges. This means if you’re a buyer and want to purchase a house you’re playing by new rules. Those rules are dictated by the sellers. So, what are some things you can do to increase your chances in a bidding war? I’ve listed a few tips below you might find helpful.
1) Pay Market Value (or Higher)
The price a house is listed at is NOT always the same as market value. Webster’s Dictionary describes market value as the following: the price at which something can be sold. The price that buyers are willing to pay for something. If a house is listed at $200,000 but you as a buyer would willingly pay $210,000 then pay it! That’s market value. Odds are if you’re willing to pay that much for the house so is someone else. We live in a world where people like negotiating just for the principle. This does not work in seller’s market. Write your offer at what you believe is Market Value. Not what the listing agent or seller has it listed at.
2) Let Go and Be Flexible
This can account for many things but I’m referring to the basic terms(price, closing costs, dates, inspections, warranties). I know as a buyer you want the best possible terms, but if you really want that house, being willing to let go of a few items may be important. You can lose the battle and still win the war.
The closing date is one of these that people overlook as important. Many sellers have an ideal closing date in mind. I highly recommend asking what would be the best closing date for the sellers prior to drafting any offers. If the seller won’t give you a set date try a range. (Example-May 2-May 26, seller’s choice on the actual date).
A few other things to possibly leave out would be Home Warranties, Inspections, and Tests, & personal property. Less is more!
3) Paying Closing Costs
Brace yourself for this one. Not only am I NOT suggesting buyers ask for their closing costs to be paid, I’m suggesting buyers offer to pay some of the SELLER’S closing costs! Crazy, huh? In the past decade, it has been common practice for buyers to ask for some or all their closing costs, taxes and insurances to be paid for by the seller. Buyers paying sellers closing cost is almost completely unheard of, even to some of the most experienced Realtors. This a rare thing to see. Which is why it works. If the buyer has enough cash to do this option it’s great because it increases the net proceeds to the sellers without having to raise the price of the home and potentially deal with appraisal issues.
4) Possession Date
Many times sellers are moving because they have or are purchasing another home. If they must sell this home prior to closing on the next home, that sometimes causes a 1-3 day moving crunch. In these situations, many sellers would be thrilled with a post-occupancy agreement. Basically, the buyers close on the house and let the sellers live there rent-free for a few days. Giving the sellers time to close on the next house and move out. This has another benefit to it; with less of a rush, the sellers usually leave the house in better order and much cleaner.
5) Write a “Love Letter” to the Sellers
When a seller reviews your offer, you are just a name. If there are multiple offers you may just be a number. A handwritten letter to the sellers talking about you and your family may just add that personal touch needed. Especially if the competing offers are close. While money talks and usually the highest bidder wins, that’s not always the case. I’ve had a handful of sellers in my career pick a lower offer because they (or their neighbors) liked one buyer over the other. It happens. I’d suggest getting personal and make sure you tell the sellers how much you love their house. If you want to add a few non-creepy photos of the family this now adds a face to the name. It might just tip the scale.
Hopefully, you find this helpful. All of the agents on our team are experienced in dealing with multiple offers and are happy to answer any questions on any of these options or more!
I wrote a similar article with 3 additional tips that are still relevant if you’re interested. Click Here to View.
Chad Blythe
The Blythe Real Estate Team
Nebraska Realty
