How to Increase Your Chances of Winning a Bidding War
You’ve found the house you love. But, apparently, so have other buyers — and it’s the same house. When several buyers want to compete for the same property, how do sellers choose among offers? What can you do to increase your chances of getting the home? Freshome asked several experts to share the secrets of winning a bidding war.
Get to know the listing agent
We’re not recommending that you schmooze — although it might help. “Befriending the listing agent is a great idea,” Tracey Hampson at Realty One Group in Valencia, CA, says. “I always make a point of speaking with the listing agent and asking who she would like to use for services like escrow and title.” In her state, it is the listing agent who normally chooses. “And I ask if there is anything specific the seller is looking for,” Hampson explains. She says you can get a lot of information out of a phone call.
Tory Keith, President of Natick, MA-based real estate firm Board and Park, agrees. “A good buyer’s agent will always have a conversation with the seller’s agent to get a feel for how competitive the situation is, whether there are terms besides price that are important to the seller and whether there will be a second opportunity to present best and final offers.” However, if the home is FSBO, you and your agent will need to get to know the seller since no agent will be involved on their end.
Choose your own agent carefully
It’s important to get to know the seller’s agent, but make sure you know your agent as well. “An agent’s reputation can and does have an effect on the offer process,” says April Macowicz, Broker Associate and Team Owner at The MAC Group RE in San Diego, CA. “If your agent has a reputation for being difficult, you can say goodbye to that home, especially in a bidding war,” she warns.
Make the seller’s life easier
If you can give the seller more time or reduce their level of stress, you might give yourself an edge. “One way to make your offer stand out is by either removing the inspection contingency or reducing the timelines on those,” Macowicz says. “If you can get away with having a 5-day inspection period, that looks a lot better to the seller than a 17-day inspection period.”
This is why it’s important to meet with the seller’s agent to find out what the seller cares about. “There is nothing worse than writing a full price cash offer to close in 30 days when the seller needs 90 days to move out,” says Tom Matthews of the Tom and Joanne Team at Gibson Sotheby’s International Realty.
And letting the seller set the moving date is another way to gain an advantage. “Put in the contract that you will accommodate the seller’s closing/moving date,” advises Sissy Lappin, Founder of ListingDoor.com.
Money is important
Of course, a higher offer is usually the first thing that buyers consider. And Jon Tetrault, a team director at The Nick Slocum Team at Slocum Realty in Rhode Island, offers some advice on how to create a compelling offer.
“Make sure you run the numbers to be sure that the neighborhood supports the price you’re offering, but the higher the offer, the better your chances,” Tetrault says. “I always suggest buyers go slightly above an even number.” So, if the home is listed at $300,000 and his buyers want to offer $302,000, Tetrault suggests offering $302,250. “That will give them a leg up in the event that someone else offers $302,000,” Tetrault says.
Another tip is to make the offer as clean as possible, Hampson says. “Don’t ask for any money towards closing costs, etc.”
Attach a short note
Lappin also recommends including a short note on what you love about the home — like the architectural details — and why you want to make it your own. “I did this on one home that had seven offers and the seller was adamant the ‘nice lady’ was going to get her home,” Lappin says.
However, Vivian Cobb of Colorado Springs, CO-based Cobb Real Estate is against including notes and letters. “Remember, this is a business deal and it’s about what makes sense for the seller,” she says. “Keeping emotions out of it is good advice.”