John and Anthony Discuss How to Win a Bidding War on a House
Related Blog: How To Win a Bidding War on a House
We are right now in prime real estate season and if you’re in the market for a new home you’ve certainly heard of bidding wars. Inventory for homes is low which means bidding wars are back. How do you win a bidding war? Well our real estate experts John and Anthony from Lamacchia Realty are here to help. You know I compare this a lot to buying a dress on ebay. After a while it’s not quite as important getting the dress as much as winning that you want to do right?
That happens for some people.
You get emotionally involved.
A little bit. People always want something that other people want as well but with inventory levels as low as they are buyers are reacting faster than we’ve ever seen, I mean things are happening within days of a home going on the market so we’ve outlined 4 helpful tips to get those buyers to actually get that home
Well let’s talk about that because a lot of times realtors are recommending that people competitively price their homes and then all of a sudden there is that action that you start to see to make that price climb but if you’re a buyer you don’t want that.
That’s right. This is great for sellers, it gives you leverage, you call the shots more, you can pick your closing date certain things throughout the negotiation other than price you have more leverage you also can get more money which is important for buyers it can be very frustrating.
So tell us about the process how you go about winning a bidding war
First point is when you’re making an offer obviously you love the home it hits all the criteria that you want to make sure the first thing is that you have an updated pre-approval
Ok so you’re walking in with that paperwork
With the offer, and we want it updated within weeks –at the latest—30 days because if you’ve been looking for a couple of months, maybe it’s back to February you want to have it updated so that a seller says, ok these folks have recently been in front of their mortgage broker.
Very important, what’s next?
Also make sure your first offer is a good one. I bumped into someone last week, a buyer, not working with us, just a friend of a friend, who made 8 offers on homes and hasn’t gotten any of them and I said tell me about how you’re going about it, and he said well I keep looking at properties that are underpriced but I don’t want to pay over list price. And I said, hold on a second, listen to what you just said, you said you’re looking at properties that are underpriced but you don’t want to pay over listing price. The list price is basically an educated guess between a listing agent and the sellers as to what a property is worth.
So you’ve got this mental block–you’ve locked yourself into your own regulations and locked yourself out of a home.
That’s right and most people learn after a few offers that you might need to go higher than that and that person probably will now. But that’s also a major factor in it, and also if you can add some personal touch , you know, if you’re an investor and you’re paying cash there’s not much personal touch, what are you going to say, I want to buy your home, flip it, and make money? That doesn’t resonate well with sellers, but if you’re someone who needs a home, maybe you have a baby coming you’re trying to start a family, you put that in your letter, that will have a real impact on the seller.
It’s funny you mention that, it does pull on your heartstrings a little bit
No question, we’ve had countless buyers win bidding wars because they wrote a personalized letter commenting on the backyard the children, the neighborhood, whatever it might be, and we’ve actually had situations where they accepted less than other offers because there was some connection between the seller and the buyer that is an important third tip which is personalizing the offer with a nice letter.
Because the seller wants to know you know I’ve loved this home I want someone else to love it.
I think it works well especially with folks who have owned their home a long time. One thing I saw this past Monday that I have never seen in my career is the buyer sent a picture of their child. He took the email– it was a cute kid! We took it as it was sent to us and we forwarded it on to the seller along with the offer and that person landed the property.
What’s the last tip?
The last tip is keep the contingencies to a minimum, so as far as home inspections, mortgage contingencies , things like that if you’re in a competitive situation, and you know you’re going to get the financing, well, maybe you waive that condition, if you know that you’ve already brought folks through and one was a contractor and you kjnow the house is sound, maybe you don’t have to have that home inspection contingency those are ctirictual cpoints that will help you loand the home.
And at some point if you are locked in a bidding war you may have to walk away because it just goes too high.
That’s right and what you mentioned in the beginning, about the whole ebay thing we do see cases where buyers get overzealous about the property and initially they say well I’ll pay 400,000, now all of a sudden they realize they have to pay 450,000 and we run the numbers and say hey you know what you shouldn’t pay 450,000 for this home, find another property. a buyer who has a good agent that they trust should tell them hey you know what you should go up on this one or you shouldn’t.
That’s why these guys are the experts, John and Anthony, from Lamacchia Realty we appreciate it very much.
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