Be a Winner in a Home Bidding War | Tips & Strategies

Real Estate Agent with Windermere Real Estate Northeast, Inc Broker License #119385

By Matt Stark

Lead Broker | Search Homes NW Group


Bidding wars are very common in the current real estate market, most notably when it comes to higher-end properties that are in desirable locations. More recently, in the Seattle area aggressive bidding wars are more prevalent and can be very nerve-racking, even discouraging if you are on the losing end. Having watched hundreds of bidding wars over the past several years, there are a few results that are seen more often. The bidder coming in with the crazy offering price makes the decision simple – money almost always wins.

It is not uncommon to have multiple winners. In a typical batch of offers, there are usually low, medium and aggressive bidders with the aggressive bids landing in an extremely similar price range. When the money doesn’t sway the seller, typically they will look at other terms or intangible factors, some of which may be surprising to the buyers.

Let’s take a look at a few different scenarios, say a home is listed at $500,000 and the seller receives two separate offers up to $525,000. The seller now has a decision to make, but how? This is a situation in which the size of the down payment can make all the difference. As the bids came in Buyer A is currently able to put down a 20% down payment while Buyer B has 30% to put down as payment. This is a situation in which Buyer B will typically win. Even though both buyers are well qualified, sellers typically equate larger down payments to lower risk.

Opening bids matter when using an escalation clause

As the real estate markets heat up, it is normal to have competitive buying situations and bidding wars. Sometimes referred to as an escalator, an escalation clause lets the buyer say I will pay (x) amount of dollars for this home, and if the seller receives another offer that is higher than mine, I am willing to go up to (y) price.

This is a situation in which the buyer with the higher initial bid will most likely come out on top. If Buyer A decides to place an offer on a house for $510,000 with an escalation clause of $525,000 and Buyer B places a similar offer of $495,000 with an escalation clause of $525,000, Buyer A shows more of an interest in the house. When these two offers came in, Buyer B had an initial offer of $15,000 less than Buyer A. The seller sees there more interest in the home from Buyer A and possibly might even question as to why Buyer B came in so much lower than the asking price. Especially if in the past all the other offers are coming in much higher.

Highest and best offer is better than an escalation clause

One thing buyers love to use is an escalation clause. It gives them the ability to remain very competitive on the price without significantly over-paying. If two buyers enter a bidding war, one coming in at the asking price of $500,000 with and escalation clause of $525,000 and the other buyer comes in with a bid of $525,000 with no escalation clause, the seller will side with the higher bidder. This usually tells the seller that the higher bid has a genuine interest in the house. While this may not seem like a rational view, this is a very common scenario that has played out many times.

Beating another offer by $1000 is simply not enough

When dealing with high-priced homes, usually a few thousand dollars is not enough to sway a seller one way or the other. One advantage a buyer can leverage in this scenario is to get a little creative. Attaching a personal letter to the bid describing how much you admire the sellers home may be enough to tip the scales in your favor.

Personal letters to the seller can sway their decision!

Sellers typically will respond well to personal appeals. Writing a letter attached to an offer talking about how much you love the house and how you can see a future there for yourself and your family can carry a lot of weight. Selling a home is usually an emotional task, many times the seller wants their home to go to an owner who adores the home as much as they did, and also fit in as a good neighbor. In a tough market, a little compassion can sway the vote in your favor. As corny as this may sound, it may be the clinching factor in deciding who gets the home.

Who is most obsessed with the house?

Another tactic a buyer can leverage, especially if they really adore the home is to make multiple visits. Having an agent that is well-organized and is constantly in contact with the seller’s agent, shows them that there is genuine interest in this home. When entering a close bidding war, it is not always about the money, but how the game is played. 


View the original post here: Be a winner in a close bidding war

Comments (27)

Robert Vegas Bob Swetz
Las Vegas, NV

Congrats on your first post to Activerain and welcome!

May 29, 2016 05:59 AM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Often it is over price, mode of payment and most important COE date..... Sellers do not want to wait 30 days and he has plenty of choices whom he wants to sell to...

May 29, 2016 06:48 AM
Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Outstanding blog. Your article is going to help many buyers decide how to write that winning offer during a competing multiple offer situation.

May 29, 2016 08:28 AM
Matt Stark
Windermere Real Estate Northeast, Inc - Kirkland, WA
Broker serving the greater Seattle area

Thank you everyone for the warm welcome!

I just heard about Activerain and I'm excited to share my blog posts and hopefully give good information.

As with any Market when it goes all the way in one direction it seems like it will never end, but it always swings back to equilibrium eventually.  In the mean time it's surely a sellers market here in Seattle.

May 29, 2016 10:28 AM
Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

Hey Matt, welcome to Activerain.  There is lots ot read and learn here and a good community of people.

May 29, 2016 01:26 PM
Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

Congratulations on getting your first blog post written and posted.  The comments section is where you can usually find the most active members of the site.

May 29, 2016 01:26 PM
Bob Crane
Woodland Management Service / Woodland Real Estate, KW Diversified - Stevens Point, WI
Forestland Experts! 715-204-9671

Looks like some good sound strategies here Matt!

Welcome to Active Rain, looking forward to reading many more of your posts, let me know if there is anything that I can do to help as you get started here.

May 29, 2016 01:35 PM
Coal Infantino
Coldwell Banker - York, PA
Realtor specializing in south central PA

Matt, welcome to active rain! This is a great first blog post, and your spot on with your ways to win! I still hear about buyers that don't believe how strong the market is, or don't head the advice of their REALTORS. I hope this post finds them so they know what to expect.

May 29, 2016 02:16 PM
Roy Kelley
Retired - Gaithersburg, MD

Thanks for sharing your advice. Best wishes for great success with your ActiveRain blogs.

Have a very special Memorial Day and an outstanding week.

May 29, 2016 10:03 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Agents don't realize that an Escalation Clause does not guarntee FULL Price !

May 29, 2016 10:15 PM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Matt, we have seen multiple offers now for over a year, and money talks over the appraised value too.   GREAT first post, and Welcome to ActiveRain!  

May 30, 2016 12:02 AM
Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

Congratulations on getting your first blog post written.  Keep it up, it gets easier and is good for business.

May 30, 2016 01:22 PM
Kat Palmiotti
406-270-3667,, Broker/REALTOR® - Kalispell, MT
Helping your Montana dreams take root

Welcome to ActiveRain. There is definitely more to winning multiple-offer situations than just price.

May 30, 2016 07:50 PM
Sybil Campbell
Fernandina Beach, FL
Referral Agent Amelia Island Florida

Welcome to Active Rain Matt Stark, I have been on a honeymoon cruise so I'm just now getting around to welcoming all the newcomers.

May 31, 2016 05:32 AM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Escalation clause is not really into pratice. The ones I have seen are all rejected.

In here, highest and best and no contigiency is often the winner.

May 31, 2016 12:16 PM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Welcome to ActiveRain Matt Stark .

This is The Best place to learn, share and build relationships with like-minded professionals.

Jun 01, 2016 03:40 PM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Matt Stark - I know I have escalation clauses and buyers letter working for my buyers - though good points in your post for sure.

Jun 01, 2016 03:42 PM
Mery Fernandez Empire Network Realty Luxury Brokerage
Empire Network Realty INC. - Orlando, FL
The Rise of An Empire, Let's Build Yours!

Hi Matt! Welcome to the world of Activerain, may your blogging  create a whole new chapter in your Real Estate Career.

Jun 02, 2016 12:49 AM
Sharon Kowitz
Cary, NC Relocation Specialist ~ Buying or Selling

Welcome to Active Rain and Congratulations on your first post!

Jun 02, 2016 03:08 PM
CA COASTAL ESTATES Lauren Selinsky Perez CRS
California Coastal Estates - Aliso Viejo, CA
"Your Real Estate Broker" #oclauren

Welcome to ActiveRain and your first blog. Following you now

Jul 03, 2016 04:59 PM