It's War! Bidding War, That Is

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Real Estate

What is a bidding war?

IT'S WAR!  BIDDING WAR!  Sounds ominous.   However, it is a fact of life in our Triangle NC extremely competitive housing market. Have no fear!  I'm here to help you with strategies.  First let's talk about what a bidding war is.

A bidding war is a real estate term for when a seller receives multiple offers on their home in a short amount of time. Unfortunately, it also means the seller can wait to see whether buyers are willing to raise their offers – and by how much – along with other concessions to make their offers more attractive.  

Often the seller will put the home on the market & will hold out making any decisions for a few days to let all buyers have an opportunity to view & put in a bid.  This is one way that a bidding war may result.   

Sellers do not divulge the amount & terms of other bids, so you are going in blindfolded.  It’s a tight spot for a home buyer. However, with representation from an experienced real estate agent, you can navigate the bidding war process wisely and win the house. 

When should you stay out of a bidding war?

There are times when it may not make sense for you to get drawn into a bidding war on a house. Such as when there are multiple cash offers way above asking price. When that’s the case, keep a steady check on your emotions and allow your dreams to evolve so you can move on to find another house that will fit your needs.  

How do you know when to walk away from a bidding war?  

The home needs major repairs: If the house is not move-in ready and a few updates are required, that may be okay. But if you anticipate a significant outlay of cash to update the property or make major repairs, you are better off looking for another house. A bidding war could tempt you to make an offer outside your budget that would eat up any funds you may have earmarked for home improvements.

The home is already at the top of your budget range: If you made your best offer right out of the gate (which may make sense if it’s a competitive market), and you have no more wiggle room to increase the amount of your offer, you should stay out of any bidding war. If you have been pre-approved for a specific amount, the house may not appraise for the higher price that bidding wars often go. If that’s the case, the bank could reject your mortgage. Hold firm to your budget and walk away if necessary. 

There’s no housing inventory in or near your desired neighborhood: When there are several houses in your desired neighborhood, it’s easier to walk away if a bidding war materializes and you’re not willing to go any higher on your price. After all, there are other houses you can consider. However, in our current seller’s market, with more home buyers looking to buy than available houses listed for sale, this creates a perfect storm for multiple offers and a bidding war on a property.

Luckily, I have some tips & tricks I use to help my clients.  Stay tuned for my next blog to learn more about them.  Or, contact me now & I’ll be happy to send them to you.