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.
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!
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