I wrote an article a couple of weeks ago highlighting how crazy the Boston real estate market has become this year. When buyers ask if there are any offers the brokers are laughing. I have heard of properties that have had over 50 offers on them. Some buyers are making offers on several properties at a time hoping to get one winning bid. They don't have time for second visits and often don't have a chance for even inspections if they want to buy the property. Like I said: "CRAZY"!
So how do you win the bidding war? Here are some ideas that will help:
1) Work with a Realtor. I don't want to discount all the hard working, non-Realtor real estate brokers out there, but if I wasn't a licensed broker I would want a member of the NAR working on my behalf in a tight inventory market. My belief is based on the fact that Realtors generally have a higher standard of professionalism, a higher standard of ethics, and are probably better equipped to navigate my offer through this tough market.
2) Know Thy Market. When the lowest offers coming in are at full asking price you know that knowledge is important unless you want to waste valuable time. You should be looking at every sale, every new listing and seeing every property that comes on in the market in order to know exactly what you should offer when that perfect property becomes available. In short: Be The Expert.
3) Work With A Full-Time Realtor. Working with a Realtor is part of the equation. Your broker must be a full-time agent. If your market is moving quickly a missed text, email or call may be the difference between you getting that property or not. If your broker is in a meeting for his or her "job" while your deal is being negotiated it stands an excellent chance of going south quickly. Choose your broker through friends, business associates and interview them before deciding to work with them.
4) Proof Of Funds. This should really be called "no mortgage contingency". Many buyers are just waiving all the contingencies. Why? Because they have no choice. They have lost upwards of 10 properties because they are writing inspection and mortgage contingencies into the offers. I don't recommend this for everyone but if your employment is steady, your credit is good and you have a good eye for what problems you might encounter with a particular property then you will probably win the bidding war with a contingency-free offer. It's risky but being out-bid on your dream home is tough too.
5) What Does The Seller Want? This is often over looked but makes common sense. You need to appeal to the seller's desire for a good price of course, but what about closing dates and all things surrounding inspections? If you are bidding on a condo, things like pets factor in as well. Your broker should be asking the listing broker exactly what will work best for the seller and write all those "seller wish list" items into the offer. In a buyer's market you can forget about all these seller desire...but in the bidding war it's all about the seller.
6) Write A Love Letter. Now you are probably asking yourself "I am offering them $50,000 over their asking price, taking out all contingencies and now I need to write a letter basically begging them to sell their house to me? Well yes and no. It's just a suggestion but personalizing the entire process does reap results in many cases. A good bio written up by your broker is a start, then look at what might be a common bond between you and the seller and try to leverage it. Maybe it's their taste in art, the fact that you and the sellers both play golf, or ski. Maybe they are fans of the same sport teams or went to the same college as you. Whatever it is that common bond if communicated might just help make you the front-runner in the bidding war.
7) Minimize Inspection Issues. If you absolutely refuse to remove the inspection contingency then be realistic and communicate to the seller that you won't renegotiate the selling price after the inspection or these days more important is to state that you won't renegotiate the price or terms after the appraisal. A high price that will stick is what the seller is looking for. You need to offer them guarantees to win the war.
8) How Fast Can You Move? If the property is empty a fast closing is of course going to look attractive. If the seller needs to find another property before moving then flexibility on the closing date is especially important. Be ready to be flexible and be ready to jump quickly through all the hoops to win the war!
I think that it's important to realize that the process of buying property in a seller's market will be a true test of your commitment to the process and taking my suggestions seriously. All markets change and a seller's market will eventually slow and become normalized again. In the meantime however if you need housing in a low inventory market you need to work with the tools that I have given you. Best of luck winning that property.
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