High demand in a low housing supply market can be caused by any number of things. The end result though is always the same – a bidding war. I know what you’re thinking, “Home sellers have the advantage in a bidding war.” Yes, home sellers currently own the home on which the potential homebuyers are trying to outbid each other. But, it isn’t always the highest bid that gets the home. I cannot count the number of home purchases in which I have been involved where a lower bid is awarded the contract because of other favorable contract conditions. Being a well-prepared homebuyer is the key to positioning yourself in the best light when it comes to a bidding war.
Back in 2008, I wrote an article entitled ‘Winning the Bidding War’ in which I explained two of my winning strategies to help buyers win the bidding war - be the last presenter and bring the clients to the bid presentation. Those two strategies have helped me produce many winning bids for my clients over the years, but they focus solely on what happens at the presentation table. The choices and preparation that proceed the bid presentation are just as important, if not, more important.
Being a well-prepared homebuyer starts when you begin your home search and you choose a real estate agent to represent you – commonly known as a buyer’s agent. When you start looking at home listings on any internet site, such as Redfin, Zillow, or MLS Listings, you will notice that the same agent names keep showing up over and over again. These are the top producing local agents for the area, and you should choose one of them.
Again, I know what you’re thinking, “My relative/friend is a good real estate agent. I’ve used Bob Agent before. They’ll represent me better than any local agent.” I’m sure these agents are good agents in their market. But unless they are a good agent in the market where you are now conducting your home search, you will be better off choosing a good local agent that has intimate knowledge of the local market.
There are several reasons why a good local agent may help you win the bidding war. Local agents will bring in-depth knowledge of the local market, and all its nuances and expectations. I have seen contracts not be considered for many reasons, some as trivial as the wrong boxes being checked. Secondly, a good local agent has a reputation in their local market and that reputation may put the seller’s agent at ease. In a high demand market, home sales happen quickly, and the seller’s agent will want to know that this transaction will be completed efficiently and on time.
Once you have chosen a good local agent and found a home on which to bid, the second step to becoming a well-prepared homebuyer is to know everything you can know about the property condition. A good local agent should help you complete this due diligence ( they might even have represented a previous buyer or seller on this exact property). A good local agent will get all the disclosure packages and inspection reports from the seller’s agent for you to review ahead of time. They should also research the permit history of the home in the County records. And, they should complete comparable (comp) reports – Homes for Sale, Homes Pending, and Homes Sold - to review together so an educated decision can be made regarding offer price.
All this up-front research will lead to good terms on the offer with little or no contingencies. This is a win-win for everyone. The buyers know the condition of the property as much as possible and the sellers have a pending sale that will not cancel.
Remember, in bidding wars, it usually comes down to the little details that make or break the sale. Stack the odds in your favor by doing everything you can to make yourself a desirable homebuyer.
Related: ‘Winning the Bidding War’