Winning Bidding Wars
Low Inventory + High Demand = Bidding War!
Loved by sellers and despised by buyers, multiple offer situations can be difficult to navigate. Not only are these situations stressful on buyers but also buyers' agents. Make sure you get your buyers prepared properly so they aren't looking at you for answers when they miss out on their dream home. Much more in the video above but here are a few ways to get your buyers ready...
- Get pre-approved, not just pre-qualified.
Work with a lender that goes beyond simple pre-qualifications. Sure, it's a bit more effort to get underwritten before you select a home to write an offer on but if only an appraisal remains, the sellers will have much more confidence in your buyers' financial qualifications.
- Analyze the data.
Where are homes selling in relation to their list price? Go beyond simple averages and dig into the data for homes that are on the market for only a week. The sales price to list price ratio of those homes will be significantly different than that of homes that have been on the market for months. What is the current supply and demand? How quickly are homes going under contract versus new listings hitting the market? Make sure your buyers understand all this data and the dynamics of the marketplace.
- Make the offer CLEAN and CLEAR.
Avoid vague clauses and try not to include many contingencies. This DOES NOT mean you should suggest a buyer waive a home inspection. A home sale contingency, however, probably won't fly in a multiple offer scenario.
- Don't hold back on price.
It is the buyers' decision and their decision alone on what price to offer on a home. There are some dangers though with holding back. Buyers have lost out on homes even when they were willing to pay more than the winning bid, but because they started too low it was too late.
- What's your Plan B?
Keep your buyers focused with this simple question. Every home is worth a different amount to a different buyer depending on the value it brings for their particular wants and needs. Maybe they are okay with losing out on the home over a $5,000 difference, but what's their Plan B?
- Negotiations begin with that first phone call.
Build a strong rapport with the listing agent and the sellers. If they like you and think you and your buyers will deal fairly and honestly that just might be the edge you need to win out over the next buyer.
That's just a few things you can do to help prepare your buyers for a multiple offer situation. Be sure to discuss this with them up front and not wait until they are under pressure to act. You want to be sure their minds are clear and they are confident if they need to bid over asking to win their dream home.