How To Win a Real Estate Bidding War

By
Mortgage and Lending with Guaranteed Rate, Marin County, CA NMLS: 22343

How To Win a Real Estate Bidding War

  

What's the one thing you can do to make your offer to buy a home stand out?  What's the secret sauce, the magic bullet, the key to success?  

 

If you answered, "There isn't one," you're pretty close.  Truth is, I haven't found any singular aspect of any offer that assures success.  All-cash offers, zero-contingency offers, overbid offers, offers with colorful "love letters," etc., none of them provide any guarantees to the hopeful buyer.  But there is one thing I've noticed that does increase the odds dramatically --- stacking advantages.  

 

More often than not, we observe that the winning bid is a combination of the right price, the right terms and the right people.  The weight given to each will vary, but these three elements seem to be common ingredients in the proverbial taking of the cake.  Ideally, you can exert a great degree of control over these aspects:  You can offer the price you want.  You can set the terms as they fit your situation and you can choose your Realtor and lender.  You have every reason to be optimistic.

 

The Price Is Right

I once had a seasoned Realtor tell me, "it's often about price, but rarely exclusively about price."  This is good advice and it's also why financed buyers are sometimes surprised to learn they beat a competing cash offer.  Perhaps the "sure thing" and its assurances of a fast close were not compelling enough to entice to the seller to forego the higher price you may have offered, sometimes because you were using financing.  So determining when to bid under, over or right at list price matters and it's a foundation for the rest of the offer you'll build.

 

The Terms-inator

Having the right terms on your offer helps appeal to the seller's confidence level (or lack of it) in you, the buyer.  Your terms also speak to the seller's preferred timing and need to control a sequence of events.  One might assume that a fast close is always the ticket here, but...not so fast.  Some sellers actually need more time to close and recognizing their key thresholds will help you craft the terms you'll state for releasing your inspection, appraisal and financing contingencies, as well as the timing of the close.

 

Not Everyday People

If you're ever so bored that you need to kill an afternoon, look up how many real estate licenses have been issued in your area.  Next, look up how many of those active licensees transact one or less purchase or sale per year.  My point here is that you have a choice of your real estate representation and choosing wisely makes a big difference in your success ratio, even before you set foot in an agent's car.  Locating a Realtor who knows the market intimately, has current negotiation experience and who garners respect in the community provides an edge perhaps greater than all the others.  Of course, choosing your lender wisely matters too, and in many areas where competition is fierce, we have learned firsthand that the listing agent will accept or not accept a buyer's offer based on who is providing the financing.  If the listing agent knows a lender can be reached as needed and has been accountable to them and their colleagues in the past, your offer takes on new meaning.

 

Hundreds and hundreds of transactions have given me a window into what it takes for buyers to succeed when they place an offer on a home they wish to buy.  The results of that perspective confirm that it's rarely any single aspect of their offer that has the ability to seal a deal, but instead the right combination of factors.  By "stacking advantages," including offering a compelling price, setting the most appealing terms and using strong professionals on their team, a buyer's odds increase exponentially.  And the best part about all of this?  Buyers control each block in that stack --- so use great care!

  

Timber!

 

Rob Spinosa
Vice President of Mortgage Lending

Guaranteed Rate
NMLS: 22343 
Cell/Text: 415-367-5959 
rob.spinosa@rate.com

 

Marin Office:  324 Sir Francis Drake Blvd., San Anselmo, CA  94960

Berkeley Office:  1400 Shattuck Ave., Suite 1, Berkeley, CA  94709
 

*The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Guaranteed Rate and do not necessarily represent the views and opinions of Guaranteed Rate.  In no way do I commit Guaranteed Rate to any position on any matter or issue without the express prior written consent of Guaranteed Rate's Human Resources Department.

 

Guaranteed Rate. Illinois Residential Mortgage Licensee NMLS License #2611 3940 N. Ravenswood Chicago, IL 60613 - (866) 934-7283

Comments (17)

Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Agree with you completely.  It takes a seasoned pro to be a guide in making good decisions - and ultimately help buyers win in multi-offer situations. 

Aug 29, 2020 08:05 AM
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Rob- well illustrated and well said. Offering the asking price or above won't always win the bidding war!  The points you've made are spot on. 

Aug 29, 2020 01:56 PM
Lynn B. Friedman CRS Atlanta, GA 404-939-2727
Atlanta Homes ODAT Realty - Love our Great City - Love our Clients! Buckhead - Midtown - Westside - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Rob Spinosa 
SO TRUE!!!!   The COMBO mkes the diifference. All the best - Lynn
More often than not, we observe that the winning bid is a combination of the right price, the right terms and the right people. 

Aug 29, 2020 06:44 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I like to wear them down with my personality lol. Nobody’s perfect these days.

Aug 29, 2020 08:32 PM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Even today one really does not have a chance to offer below asking price. Homes have fewer but still multiple offers are received with no contigiency. 

Aug 29, 2020 09:39 PM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Actually Tom Ferry had a bunch of great tips about multiple offers with the market being how it is.

Aug 30, 2020 06:44 AM
Gary Thomas
Preferred Properties Key West - Key West, FL
Realtor to the Dreamers

Rob, I normally call the listing agent prior to writing an offer to find out the ideal closing date for the seller and any other issue that would make my buyers' offer the best offer.

Aug 30, 2020 06:47 AM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Rob - although real estate may be seem like a "game" or merely child's play to some, "winning" involves knowledge and strategy to be consistently successful.  

Aug 30, 2020 07:16 AM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Rob Spinosa - I like the way you have presented this because it is really a campaign with numerous parts.

Aug 30, 2020 10:08 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Rob Spinosa ,

Congratulations on a well deserved featured post. Buyers need help in a multiple offer situation and having a well seasoned professional agent working in their best interest along with a local well know lender can help secure the home.

Aug 31, 2020 06:41 AM
Dan Hopper
Dan Hopper - Gold Way RE - Westminster, CO
Denver Broker / Author / Advocate/Short Sale

Very good posting,  .  Price is a key element in generating an offer, and it helps to have an informed Buyer making that offer.  As you stated, not just exclusively the price, include the other important elements of the contract, dates, earnest money, inspections, loan approvals, appraisals... seller needs that the buyer can assist in making it happen.  

Aug 31, 2020 08:09 AM
Paula McDonald, Ph.D.
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

Excellent post on this topic. So many variables add to a great offer. Educating our clients is paramount. 

Aug 31, 2020 02:24 PM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

GREAT post!  It's so important for agents to communicate with the other agents so that we can glean from them the best terms to win the day.  Great points!

Aug 31, 2020 07:39 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Good advice - and at the core are a good agent and a good lender.

Aug 31, 2020 08:36 PM
Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland

Great advice! Great Post!  It is important to have a seasoned agent and lender. 

Sep 01, 2020 06:34 AM
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Even when a buyer makes a good offer, is flexible on closing, has money down, working with local lender.... if there are five, ten, fifteen offers on a property, sometimes all you can do is hope you are the one chosen.  

Sep 01, 2020 08:53 AM
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

Congrats on a well deserved Feature post!

I sold and bought a couple of years ago. As seller I was torn when I had two offers on my home. I 100% liked one couple over the other. I really wanted them to have the home. The problem was the other couple had the better offer...not just better. It was cash. The couple I wanted needed financing that my agent said had a very good chance of not happening.

The cash couple wrote one of those "choose me" love letters. Honestly...it felt so cheesy to me....so manipulating. Not a fan and it did nothing to sway me.

We had already found a home we wanted to buy and we couldn't take any risks of losing a buyer on our home so we went with the cash buyers. 

Turns out we were then in a multiple buyer situation on the home we wanted. We got it, even though there were two higher offers, because we were cash buyers. No, I did not write a love letter to the sellers. 

Sep 02, 2020 08:42 AM