At the height of the housing market, many buyers were left wondering how to win a bidding war on a house. Seemingly out of control, bidding wars popped up frequently in the Adirondacks and in markets across the U.S. With escalation clauses, “love letters,” and removal of contingencies, many bidders lost out as these tactics influenced sellers to choose other buyers.
At Adirondack Premier Properties, we aren’t big fans of bidding wars. When we find ourselves heading into a competitive situation, we prefer to have best and final offers ready. As a buyer, if you are interested in purchasing a property in a high demand area, it’s a good idea to familiarize yourself with bidding war dynamics to understand how to best position yourself.
Read on for our thoughts on how to win a bidding war on a house in the Adirondacks or elsewhere.
How To Win A Bidding War on A House – Preparing
If you decide to pursue a property in a high demand area, the best thing you can do is think through important variables ahead of time. These include identifying your source of funds as well as any contingencies you plan to require.
For your funding source, decide if you will pay cash or take out a mortgage. If you are applying for a mortgage, find out the maximum amount you are approved to borrow. While you may not reach that number with your bid, having pre-approval will give you advanced knowledge of your limit. When you hit that, it’s time to step away from the bidding process.
You should also determine what contingencies will come into play. Do you want to have tests done on the home? Will you require an inspection? Do you need to sell your own home?
Realize that contingencies can delay closing on the home. If a quick closing is important to the seller, this could sway them to another buyer. A seller might shoot for a quicker closing by choosing a buyer paying cash and requesting no contingencies.
How To Win A Bidding War on A House – During
Having a strong real estate agent in your corner is your best strategy when it comes to knowing how to win a bidding war on a house. An experienced agent like those on our team at ADKPP can guide you on how to maneuver around other offers as they come in. They can also give suggestions on what might make your own offer stronger.
A strong agent can also help you call out banned tactics. For example, the New York State Board has now outlawed “love letters.” Potential buyers are now prohibited from contacting sellers with letters about how much they love and want to purchase the home. Keeping these tactics out of the mix keeps the playing field level.
A strong real estate agent can also protect you from yourself. Real estate can be an emotional process where buyers make rash decisions. Having someone on the outside can help bring you back to level as an excited buyer. This is especially important when tactics like escalation clauses come into play. Knowing your maximum bid as well as having a level headed strong agent protects you in the long run.
While real estate is generally an appreciating market, beware of FOMO. Purchasing a property based on the fear of missing out can lead to poor outcomes due to market fluctuations. A hot sellers’ market can very quickly turn into a buyers’ market leaving you in the negative for your purchase.
How To Win A Bidding War on A House – After
If you’ve just navigated a bidding war, hopefully you won! If not, you may be feeling disappointed, but there is a silver lining. You are now armed with new knowledge and experience, and prepared for the next property you find. Sometimes, even with a strong agent and the best offer, the homeowner just feels more comfortable with a different deal.
Often, a lost bidding war has less to do with your offer or the agent, and more to do with the people in the mix. Sometimes, people are just funny and have some kind of gut feeling that leaves them wanting to sell to a different person. Knowing this is the case, going in as prepared as possible can help you feel good about knowing how to win a bidding war on a house.
No doubt, bidding wars can be a messy business in the real estate world. Like Adirondack Premier Properties, more agencies are now starting to lean toward the best and final option. This gives every party involved a fair chance and protects all parties involved. Putting a final offer on the property instead of worrying about how to win a bidding war on a house is the better way to go.