How to Handle a Bidding War

Bidding wars are every seller’s dream and every buyer’s nightmare. If you have a client who’s looking to buy a home that ends up getting multiple offers, there are a few things you can do to help get them into the home of their dreams.

Make sure your client is prepared

Potential bidding war or not, your buyers should have all of their financial ducks in a row before you take them on their first tour. There’s almost nothing worse than falling in love with a house that’s too expensive, so it’s important that they know how much house they can afford before you help them begin to explore the market for their next home. Get them in touch with a trusted lender that will help them determine both the maximum amount they’ll be able to borrow as well as the amount of cash on hand they’ll need to finalize the purchasing process. If they end up facing tough competition for their dream home that leads to a bidding war, this step becomes especially important.

Stand out

If your buyers are adamant that a particular home is their ‘dream home’, it might be wise to help your clients understand the potential implications of eliminating certain contingencies in order to make their offer more attractive to the seller. If your buyers are able to add another mortgage to their short-term financial responsibilities, eliminating a home sale contingency may make the seller more willing to choose their offer over others. When letting your clients know about this route, it’s important to make sure that they understand that it may mean that they’ll be stuck with two mortgages for an indefinite amount of time if they have problems selling their current house.

If eliminating the home sale contingency isn’t something your buyer is willing or able to do, it might be smart to advise them to offer to cover the closing costs. This offer can be very attractive to sellers, who often have added financial responsibilities of their own since they’re usually in the process of buying a new home.

Do your homework

Doing a comparative market analysis of similar homes will give you and your client a great idea of what the home is worth. If you’re part of a great real estate brokerage, you’ll be able to use their resources to find out as much as you can about the market trends in the area. Along with studying the market, learn what you can about the sellers by reaching out to their real estate agent. Tailor your suggestions on how your buyers should proceed according to the needs and preferences of the seller. If you get word that they haven’t found another house yet, for example, you can advise your buyers to include a clause in their offer that says they’re flexible about the settlement date.

Get creative

Sometimes, all it takes is a handwritten, thoughtful letter to put your buyer at the front of the pack. If a seller is overwhelmed by a number of similar offers, their ultimate decision might come down to gut feeling instead of being a strictly financial one. Advise your buyers to write a note to the sellers that details what it is they love about the house. If your buyers are planning on having children, for example, they could talk about how excited they are to build a family there. If the backyard is perfect for their dog, or if they’ve fallen in love with the neighborhood, they could talk about the memories they’re looking forward to creating in the home. The more personal, the better. As long as it’s authentic and from the heart, a personal letter will make your clients stand out – and may just get them into the home of their dreams.

Set Limits

Above all, don’t let emotions drive up the price above market value. Urge your buyers to pick a maximum number based on your market analysis, and then recommend that they stick to it – no matter what. It’s easy to get caught up in the heat of the moment, but there’s almost nothing worse than being stuck with a mortgage that’s too high. If your buyers end up not winning the bidding war, remind them of this – and then get back to the search!

Elite Realty is committed to helping every one of our agents succeed. We offer broker support, free continuing education classes, technology support, marketing tools, and a competitive commission and fee structure. To learn more about what makes Elite Realty different, please get in touch! We are happy to answer any questions you may have and are always here to help.