When homes hit the market in neighborhoods with strong demand and low supply, the real estate market can get quite competitive. These instances can cause bidding wars to erupt which are positive for sellers, but negative for buyers. And when the buyer is the one with all the money, is it really worth it to partake in a real estate bidding war, or are you better off moving on?
Explaining a Real Estate Bidding War
Bidding wars in real estate happen when potential buyers of a property compete for ownership over a home through a series of increasing price bids. During the home buying process, buyer’s agents send offers to the listing agent and then the listing agent will present the written offers to the seller. Mose state laws require that listing agents present ALL written offers to their sellers to give each buyer a fair chance. This also makes it easy for sellers to compare the terms of the offers. When it isn’t clear who made the better offer is when the bidding war usually breaks out. In this case, sellers will often ask buyers to “sweeten the deal. Or “make your highest best offer” instead of countering formally at all. Then, buyers are expected to counter themselves with a better offer (not having been formally responded to) until the seller chooses the best one. Sometimes, this process can be lengthy and is usually very frustrating for the buyers.
How to Handle a Bidding War
Before you get caught up in the excitement of trying to outbid another buyer for your dream home, you should refer to your real estate agent to determine whether it’s worth being involved in a bidding war or not. Typically, it’s recommended that you try to avoid a real estate bidding war. After all, the buyer is the most important component in a real estate transaction because they’re the ones with the money. Sellers will often make you feel like you’re the lucky one for “getting to” purchase that home. However, buyers are usually in a position where their options aren’t as limited as the sellers. Remember, “he who has the cash is king.” So, how do you avoid getting involved in a bidding war when it comes to buying your dream home?
Avoiding a Real Estate Bidding War
There are a few ways you can avoid being involved in a real estate bidding war. One of them is to give your best offer early on. You and your exclusive buyer’s agent should research the home to see if it’s actually worth the full asking price. If it is worth the full asking price, and you’re comfortable with paying that, then consider that when making your offer. Another way to avoid a bidding war without sacrificing your integrity is to be flexible with the closing date. Sometimes this can give you the upper hand in a transaction because it frees the seller of being pressured to move earlier than they wanted to. This doesn’t mean that you should completely work around the seller’s schedule, but being somewhat flexible may help your chances of the seller accepting your offer over someone else’s. Lastly, consider the time of year of “season” you are shopping in. If you can, shop for a home in the slow/off-season when there are typically far fewer buyers competing and fewer seller’s “experimenting” with how much they can sell their house for.
Again, be sure to discuss all options with your real estate agent. An exclusive buyer’s agent will help you get the home of your dreams by counseling you to avoid putting yourself in a bad situation. Their main goal is to represent you, the buyer while considering your best interests and only YOUR best interests.
Connect with Remaklus Realty – Trusted Exclusive Buyer’s Agents
Bidding wars can put buyers in a vulnerable position, which is why it’s so important to have proper representation. At Remaklus Realty our realtors are dedicated exclusively to helping buyers find their perfect home. Not only do we assist you in your search for the home of your dreams, but we’ll work in your best interest to ensure that you get a great deal and a dream home that is with your money. Your best interest is our only interest. Connect with us today!