November 23, 2015
How to Win a Bidding War
Are you searching for a home and keeping losing out to better bids? It’s possible that your attack plan is misguided, so here are 5 tips of advice on how to work with your agent to land the property you want.
Find out what the house is really worth
Contrary to common belief, the listing price doesn’t matter.
When advising you on how much to offer, your agent should be looking at the fair market value, meaning how much the home is actually worth, not what it’s listed for. To do this, your agent should have a list of comparable sales in the area, based around similarities like square footage, number of bedrooms and bathrooms, and other perks.
Your agent should have a range, not an exact amount, and should also be taking the time of year into account, as well as any other desirability factors, to know if you should be aiming high or low on that scale. It’s very possible that the home is listed above fair market value, so be sure your agent knows the neighbourhood and the city very well. And if it goes well above a fair amount, it’s not the home for you.
Go see it Day 1
It’s important to be actively looking for homes and have an active agent. Seeing homes as soon as they’re posted is best practice, for a number of reasons.
Some sellers will hold back offers for seven days, meaning they’re waiting for a lot of potential buyers to get excited. You’ll want to get in there Day 1 to make sure, if you’re interested, you have enough time to due your due diligence before you make an offer. This includes getting a home inspection, having your financing approved, and making amends with any conditions.
Essentially, you want that full week to do anything and everything possible to be ready to put in the best offer after seven days.
Inquire about bully offers
Another reason you should be checking out homes early is to determine whether or not the sellers are accepting bully offers.
Even if the sellers have said they’re holding off for a week or so to receive offers, they may be accepting offers early, to ensure they sell they’re property; these are called bully offers. If you see a home and you’re positive you want it, you may want to “bully” your way into landing it, before others have a chance.
Be sure your agent is the one to ask about this—you don’t want to come across as too eager or offensive. Agents know how to go about discovering this information, so let them take care of it.
Agents should be pals
Likely your best offence in winning that bidding war is to have a friendly agent who becomes close with the listing agent.
When the offers come in, if the sellers and the listing agent know you and your agent, you stand a better chance of having your offer accepted. If the agents are friends, the listing agent could unknowingly promote you as the buyer.
It’s true in so many cases, including this one: networking is everything, so be sure your agent is working those mad networking skills.
Make sure your agent has an offer night strategy
If bully offers aren’t being considered, offer night is the most important night in landing that home of your dreams.
It’s extremely important that your agent has a strategy fleshed out for that night—going into it blind is a big mistake. Your agent should be considering a number of things, including:
- The price you’re entering with
- Is it on the high or low end of the fair market value range?
- Using conditions as leverage
- Closing date of 30, 60, or 90 days
- How high are we going and how many rounds are we going through?
If your agent’s strategy is to just jump in with one number and then wing it, that’s probably not a good sign. It’s absolutely fair to ask your agent questions and expect a clear strategy for this process.
One important last note
While these tips are for you, they’re for you to use while working with your agent. Don’t go rogue and upset your agent by being unfair, but do your homework and develop a relationship so that you can ask real questions. Only then are you sure to land that home and win your bidding war.
Flickr: Dafne Cholet