20 Tips to Win a Bidding War

By
Real Estate Agent with Keller Williams Realty-DFW Preferred TX Broker #0492423
http://actvra.in/4fPL

It's getting brutal right now in the DFW market.   Lots of cash offers and lots of homes getting multiple offers.

DFW Dallas Fort Worth Home Bidding Wars

Here are my bull whacking tips for winning what is quickly becoming all out war for home buyers or in Texas terms a Steer Wrestling Contest.

Bidding Tips

  • Bid quickly.  1st day on the market is best.  Know what you are willing to offer before you see the house.
  • Work with an agent who uses programs like Docusign or DotLoop to sign your offers online and get them in quickly.
  • Bid like you mean it.  Lowball offers are of another era.  Lowball a seller today and you might not even get a call back or a chance to rebid.
  • Lots of people think bidding is only about price. There is the front page price, but there is so much more to an offer....lots of terms, times, down payment, option money, earnest money, favorite title companies, leasebacks, deposits, and on and on.   Upfront price helps, but terms may seal the deal.
  • Consider bidding without seeing the house first.
  • Consider bidding over list price.  There are plenty of homes selling over list price.
  • CMAs may not tell you the whole story.  If prices are up 10-12% over last year and expected to rise another 10-12% this year, basing your bid on homes that sold 6 months ago may leave you in the dust....or worse yet in your apartment.
  • Consider interest rates.   If you continually loose bids and interest rates go up 1-2% this year, how does that affect overall what you may pay for the house over the next 30 years.   If you pay $305,000 for a $300,000 house, you might pay $5000 more today which financed might be another $35/month.  If interest rates rise 1% that might mean another $250/month.   Which is better for you.   If you don't understand interest rates and FV and PV functions, ask your lender to run scenarios for you or explain it to you. (Do this before you find the house, don't waste time after you find the right house.)
  • Never bid even numbers....like $200,000.  Bid $200,015 or $202,177.   The extra $177 might win the bid.
  • Use a local, reputable, well-known lender like David Bradley at Just Mortgages for your loan.  If the lender can underwrite your financial ability before you bid, include that information in the pre-approval letter you submit with your offer.  Have your realtor explain this to the listing agent.   There is a difference in lenders.
  • Offer to close quickly.   Some lenders can close a loan in 8-15 days.   If you can find one that does this use them.   Don't make a seller wait for 30-45days.
  • Offer non-refundable earnest money.
  • Offer a second earnest money deposit.
  • Put down more earnest money than the next guy.  Put down double or triple the normal earnest money.
  • Offer to pay some of the closing costs a seller might typically pay.  Pay for your own survey.  Pay for your title insurance.  Pay HOA transfer fees.
  • Offer a leaseback to the seller.  If you can close in 15 days, but don't need the house for 30 or 45 days, offer the seller a chance to stay rent free during that time period.  That can put sellers at ease that #1 you will close, #2 they can use the equity in this house towards the next purchase, #3 they don't have to pack and move and risk you not closing.  Many loans will allow you to lease the home back to the seller for up to 60 days.
  • Waive or forgo as many contingencies as you can.   That might include inspection and appraisal contingencies.  If you are adamant about an inspection or appraisal, tighten up the inspection timeframe or offer to cover an appraisal deficiency.
  • If you know your lender requires a 5% or 20% down payment and you have the cash to put down more, consider writing the offer for 7% or 25% down.   Inform the seller you have the extra cash to make up an appraisal deficiency.
  • Back in the heyday of bidding wars in the San Francisco Bay area, buyers would bring wine, flowers, fruit baskets, and perhaps even a vacation certificate, along with a heartfelt letter of why they wanted to start or raise a family, or retire, or whatever reason it was they wanted the house.  Include pictures of your family and pets if you think it will help.
  • Do you have anything you can offer the seller to sweeten the deal like restaurant certificates, hotel vouchers, airline tickets, spa treatments, lawn mowing service at their new house?

 

 

Beware of Risky Bidding

  • Be wary of realtors advising you to include escalation or elevator clauses, that say something like you will pay $500 or $5000 or x% over the highest offer the seller gets.   That could really get you in trouble.
  • Be careful with appraisal contingency clauses.  Appraisers are now legally on the hook for overvalued appraisals and need to be able to PROVE value.   Putting in clauses that you will cover appraisal deficiencies may be telling the appraiser that both buyer and seller and agents agree that the house may be overvalued and push that risk back on you with a low appraisal.
  • Be wary of agents pushing pocket listings.   If they'll cheat their seller, they'll cheat you too.
  • Take a Buffet lesson, Don't bid on what you don't understand.  Know your neighborhoods, Know your prices.
  • Online tools are a reference in values, but often way way off.  Sometimes too low, sometimes too high.  Don't use Zippo, Tax Apraisals, or Blackfish to determine what you should bid.  If you are even tempted, read their disclosures on margin of error.  It's funny to see people want to use these values when bidding, but get upset once they are ready to sell.   Remember these are very general estimates.  A great broker can help guide you on a better estimate of value based on the other nine homes they've shown you.

Your agent did not cost you the bid.

Normally this is the case.  It's not your agent's fault you did not win.   That is if they are as quick to the draw as you are.  Can they show you homes the 1st day on the market?  Can they prepare offers immediately after you see them?  Are they giving you the tips above?  If not call Bruce today at 214-675-6992.

 

DFW-Dallas Fort Worth Metroplex Market

If your agent is not quick to show and quick to bid, give us a call.  We're not only agents, but also brokers.  There are lots of new agents in the market, who just don't have the experience to understand it yet.  Don't wait until next weekend to see a house that will likely already be under contract.   Call us 1st or last, but do call and let's get you a house.

 

close

Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Will Nesbitt 04/23/2014 12:27 AM
  2. Nina Hollander 04/25/2014 05:30 AM
  3. Gene Riemenschneider 04/25/2014 09:26 AM
  4. Winston Heverly 08/03/2014 03:31 PM
Topic:
Home Buying
Location:
Texas
Tags:
contract
appraisal
list price
offer
bidding
win
bid
dfw
over
metroplex
dallasfort worth
wars
sweeten

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Rainer
367,323
John Dotson
Preferred Properties of Highlands, Inc. - Highlands, NC - Highlands, NC
The experience to get you to the other side!

These are good tips.

I like, "Make it cash and Make it clean"

Apr 26, 2014 05:30 AM #25
Rainmaker
358,202
Travis "the SOLD man" Parker; Associate Broker
Team Linda Simmons, Enterprise, AL 36330 - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

MANY good ideas. After being burned personally on a Lease-back, I strongly advise against them!

Apr 26, 2014 07:22 AM #34
Rainmaker
2,199,161
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Bruce - Thank you for the list of very good twenty tips to win a bidding war.

Apr 26, 2014 10:51 AM #35
Rainmaker
98,626
R. Bruce Lynn
Keller Williams Realty-DFW Preferred - Coppell, TX
Broker Associate and Your Realtor

@Michael Blue....I get it that blind offers can be somewhat risky for the seller, I have sold several over the phone, internet, and long distance.  Often investor, but sometimes to retail buyers too.   Something I might not ever do, but there are others willing and able...interestingly enough I don't think I've ever had any back out.  Some of the people I never met....and have not met to this day.  Same for sellers....I've had several I never met.  I sell in the neighborhood, they send keys, we sign everything by docusign, we get it sold, and they close remotely.  BOOM it's done.

Apr 26, 2014 03:08 PM #36
Rainmaker
98,626
R. Bruce Lynn
Keller Williams Realty-DFW Preferred - Coppell, TX
Broker Associate and Your Realtor

@Travis Parker.... you're right I really don't like the leases on either side.  Never liked them, and normally advise against them, but in today's market it has often made the difference in getting the deal or losing it for me on both the seller and buyer side.   The trick is, I'd say we spend more time with more upset people long after the closing dealing with those darn leases.   Then again as my buddy says....if they're weren't problems for the customers to call about, they wouldn't need us. 

Apr 26, 2014 03:15 PM #37
Rainmaker
98,626
R. Bruce Lynn
Keller Williams Realty-DFW Preferred - Coppell, TX
Broker Associate and Your Realtor

@Silvia Dukes    I'm not the biggest fan of blind offers either, but I've had my eyes opened several times over the past few years.   While not something I would probably do, I have had several customers I never met who bought blind and happy.  Mostly investors, but some retail buyers too.  Always makes me nervous, but so far several times it has worked out just fine.

Apr 26, 2014 03:17 PM #38
Rainmaker
98,626
R. Bruce Lynn
Keller Williams Realty-DFW Preferred - Coppell, TX
Broker Associate and Your Realtor

@Gene Riemenschneider  Thanks for the reblog.

Apr 26, 2014 03:18 PM #39
Rainmaker
98,626
R. Bruce Lynn
Keller Williams Realty-DFW Preferred - Coppell, TX
Broker Associate and Your Realtor

@Nina Hollander Thanks for the reblog.   

Apr 26, 2014 03:19 PM #40
Rainmaker
98,626
R. Bruce Lynn
Keller Williams Realty-DFW Preferred - Coppell, TX
Broker Associate and Your Realtor

@Mike Kozlow    It happens, terrible when it does.   I wish there was a way to verify the seller has seen, rejected, or countered the offer.....that they had to sign something.   I trust most agents, but you never really know, and often the buyers I think go away with a feeling of mistrust, thinking something sinister went on, even when everything was legit.   You also never know when you submitted $1mil and the other buyer submits higher based on your offer, but your buyer was not given the chance.

Apr 26, 2014 03:24 PM #41
Rainmaker
738,844
Troy Erickson
Diverse Solutions Realty www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Sometimes it's difficult for buyers to understand that there may be others who are interested in the same home they are interested in. A couple of things I really like are not offering even numbers, offering a higher earnest money deposit, and offer to pay some of the closing costs a seller might typically pay. 

Apr 26, 2014 04:06 PM #42
Rainer
231,266
IRMA Beltran
Century 21 M & M and Associates-Turlock homes Real Estate - Turlock, CA
Your Real Estate Agent 4 Life Always there 4 You!

Very informative thank you for sharing

Have a blessed day

Apr 27, 2014 01:40 AM #43
Rainmaker
45,699
Catherine Robles
American Lighthouse Estates, Inc. - San Francisco, CA
Lighting the Way to the American Dream

great tips.  'ive won lots of bids for my buyers usuing the same strategies.  thank you for the reminders!

Apr 27, 2014 06:04 AM #44
Rainmaker
1,288,270
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

Great list except for the risky bidding part. What's risky about $500 over what the highest bid is? I've done that many times & what's the big deal? If it ends up being too high over the buyer threshold, they can back away & be out of the house.

Apr 27, 2014 08:06 AM #45
Rainmaker
170,740
Vicki Pedersen
Pedersen Real Estate - Riverside, CA
Providing Exceptional Real Estate Service

This is a terrific list for dealing with bidding wars.  I have used several of these and they can definitely make a difference for the buyer's offer getting a serious consideration.  Often sellers just select the best and highest offer and don't come back with any county offers giving buyers an opportunity to improve their offer. When in a sellers market where there are multiple offers, its best for the buyer to come in with their best offer from the beginning.  

Apr 27, 2014 02:13 PM #46
Rainmaker
360,271
Graziella Bruner
BRUNER REALTY LLC - Wayne, MI
Broker/Owner - Serving Wayne & Oakland County

These are great tips for those in bidding wars, seems like we're getting more and more of this happening in our area as well. I always tell my buyers to come in strong and not in second! Thanks for sharing.

Apr 28, 2014 02:35 AM #47
Rainmaker
450,690
Gloria Valvasori, ASA
Better Homes and Gardens Real Estate Signature Service - Streetsville, ON
Quality Service, Exceptional Results, Since 1987

Very good post with some great information.  Our market is a Seller's market right now and multiple offers are the norm.  I try and educate my buyers before submitting an offer, to go in with their best price they feel comfortable with, with as quick a closing as possible, and with the least number of conditions as possible...

Apr 28, 2014 11:02 PM #48
Rainer
46,635
Jordan Gouger
Keller Williams Realty Inc. - Austin, TX
Helping you to achieve your housing goals!

Great post! I completely agree with you about being quick. There have been many times that I have been working with a client and see something that is almost perfect for them at 1 am and they see it and want to make an offer. Being fast in this market is an invaluable trait. 

Apr 29, 2014 12:30 AM #49
Rainer
133,134
Deleted Account
Fort Myers, FL

Excellent post and great tips for me to pass on to my clients!

May 01, 2014 09:41 AM #50
Rainmaker
1,105,874
Jeff Jensen
The Federal Savings Bank/Lending in 50 states - Greenwich, CT

You have given buyers and their Realtors a lot to think about here.

May 05, 2014 07:31 AM #51
Rainmaker
273,173
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

This is a good list. I may start usuing the lease back idea. Thanks.

Jun 13, 2014 01:47 PM #52
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R. Bruce Lynn

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