How sellers AND buyers can win in a “bidding war” market
One of our favorite aspects of working in real estate is that the market changes constantly. Spring is always our busiest season, and this year’s spring market has been one of the craziest yet! Now that we are through the worst of the pandemic and interest rates are at historic lows, buyers are out in full force. Pair that with our area’s low inventory, and you have the perfect formula for a strong seller’s market...which can mean bidding wars!
When the market strongly favors sellers, multiple offer situations get lots of air time. For the past several weeks, we have had numerous conversations each day with our clients, both buyers and sellers, on the topic. And we understand why: bidding wars can be stressful if you are not properly prepared. That is why today we are sharing our best tips and advice for both buyers and sellers for how to win!
What does winning look like?
For many sellers, creating a multiple offer situation is the ultimate real estate goal. But it is important to also think about what winning means to you. Is your number one goal getting the highest price, a specific closing date, or financing terms? These are all questions you should consider.
Seller Tip #1: Pricing is key
When it comes to creating the type of demand that incites a multiple offer situation, pricing is key – and that means you need a broker with a deep understanding of the local market. Buyers are more educated than ever and typically feel they have a strong understanding of home values. That is why it is essential to list a home so that it is perceived as the very best option in a particular competitive set and price bracket. By pricing competitively, you will undoubtedly stir up all the buyers sitting on the sidelines waiting for the right opportunity. The more initial demand you create, the higher the chances of driving up your sales price as buyers become more and more invested in winning.
Seller Tip #2: Make your home appeal to the masses
Creating a universally inviting space is essential for creating demand. There are a few simple steps you can take that make a huge difference: painting walls with a fresh coat of neutral paint, cleaning, rearranging furniture and depersonalizing decor are steps we take for all of our listings. Yes, this is upfront work, but putting your best foot forward is the best way to take potentially negative buyer feedback off the table. Having worked in the area for so many years, we know all of the best home service vendors that make the process as seamless as possible!
Seller Tip #3: Negotiation is crucial!
When we work a multiple offer situation for our seller clients, our biggest goal is not to just get the highest price, but to get our clients to the closing table. That means analyzing every point of an offer, assessing a buyer’s ‘intent to close’. Intent is made up of a number of factors including price, close date, money down, financing...the list goes on and on. People always say ‘cash is king’ in real estate, and while cash is great, to us, ‘intent to close’ is what really matters, and we don’t stop until we feel we have done everything we can to present the strongest offer to our clients.
Our best bidding war advice for buyers:
Get pre-approved before you even start! Your offer will look much stronger accompanied by a pre-approval letter from a trusted lender, so it makes sense to get that out of the way even before you start looking at homes. We know many amazing lenders if you need a referral!
Understand the inventory: On many blocks in our area you will find a $300K home next door to a $1M home. You will have a much easier time putting together an offer if you understand the market and the variability in our market.
Know we are in a competitive market: Chances are that if you like a home, other buyers may too. Be confident in your knowledge, so that when you make an offer you feel good about it.
Know your number: Before submitting an offer, think about what the home is worth to you, regardless of other factors. What price is your point of no regret? If you have this number in mind early, it helps maintain focus on the bigger picture.
Bidding wars are complex, and every single situation is different. We are here anytime to answer questions! It is always better to have questions upfront versus in the middle of a high-stakes situation.
