Dealing with bidding wars
Amazingly, we are seeing some aggressively priced homes receive multiple bids. So if you’re house hunting, how do you deal with this situation? Here are answers to frequently asked questions about bidding wars.
Is the listing agent required to notify us if they get another offer on a home we’ve expressed interest in?
No. Your agent can ask to be notified if another offer comes in, and often the listing agent will honor this request to try to get multiple offers. However, if they received a particularly attractive offer, they may be inclined to work with that buyer who stepped up first instead of soliciting multiple bids.
The listing agent said they’ve received another offer. Do you think they’re telling the truth? Maybe they’re just trying to get us to offer a higher price.
This is an understandable concern. However, if a listing agent lied about this, they would be putting their real estate license at risk. If your agent truly believes something underhanded has occurred, they can file a complaint and request that the listing agent provide written proof of the other offer. However, this only occurs in rare cases, and the proof would only be provided after the fact. (In other words, you can’t do this while the bidding is still going on.)
The home I want has multiple offers on it. Can my agent find out what the other offers are?
Typically, listing agents don’t reveal details about other offers, as it could compromise their client’s bargaining power. The listing agent has a fiduciary responsibility to get the best price for their client. In some instances, the listing agent may (with their client’s permission) reveal some information about other bids if they feel it’s in their client’s interest to do so.
Your buyer’s agent can ask the listing agent whether certain factors could make a difference to her clients. For example, would the ability to close faster make your offer more attractive?
The home we want has another offer on it. How quickly do we need to submit our bid?
Time is of the essence in these situations. Your agent should find out when the sellers will be reviewing the offers (often within 24 hours or sooner).
Do I have to offer over list price if there are multiple bids?
Not necessarily. There may be multiple bidders who are making offers, but that does not mean they’re offering the list price. Your buyer’s agent can advise you about recent comparable sales and help you determine a competitive offer price.
The important thing is to pay what you are comfortable with. It’s easy to get swept away in the emotions (and competitive nature) of a bidding war. To avoid this situation, decide on your top number ahead of time. This way, you won’t end up overpaying.
I really want this house. What else can I do to make my bid more attractive?
There are a number of strategies for making a winning bid.
- Be flexible about your closing date. This may be helpful to the homeowner if they have particular time constraints.
- Demonstrate the best financing. Buyers with a large down payment (20% or more) and a pre-approval letter from a credible lender are more likely to be considered seriously.
- Tighten up the inspection dates. Let the sellers know you will conduct a home inspection quickly.
- Consider how to handle the inspection. Oftentimes a buyer will have the option to revoke their offer to purchase if they find any defects in the property during the home inspection. Your offer may be more attractive if you’re willing to forgo credits for minor home inspection repairs. Or you may agree to a “go/no go” inspection where you have the right to back out of the purchase if you find a major defect during the inspection, but you waive the right to ask the seller for inspection credits.
- Cash is king. If you have the ability to pay cash for the home (vs. getting a home loan), this will make your offer very attractive. If you’re considering this option, talk with your financial advisor to understand any tax implications of doing so.
Follow http://blogs.wickedlocal.com/onthemove for the latest real estate tips. Have a real estate question? Contact Leslie Mann at firstname.lastname@example.org or 508-904-4967 and she'd be glad to answer your confidential questions here. Mann is a real estate agent with Hallmark Sotheby's International Realty in Hopkinton.