No Need to Stress Over a "Bidding War!"

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Real Estate

So far I've never had a seller say to me: I don't want a bidding war over my listing. Who wouldn't want the highest price they can get? But I have had several buyer clients say to me, with great weariness, or wariness, or fear, maybe even anger, I don't want to get caught up in a bidding war. I think I'll wait until things cool off.

Problem is, that may not happen for awhile. It's still a seller's market out there and experts predict it could go on for quite some time. Some say three more years! We've got high tech coming to NC, which means more folks will be looking for homes, and some for second home beach getaways. Millennials are jumping into the market in greater numbers than before. Boomers are moving away to be nearer grandkids. New construction is limited, and costs of materials have risen. On top of all this many companies are allowing employees to permanently work from home, meaning they can move wherever they wish. All in all, there's a huge migration going on. 

While competition can be fierce when buying a home, the term "bidding war" is erroneous. The actual situation need not be feared. What's happening these days is this: A property gets listed. Then there are immediately showings, often many, many showings. Offers come in immediately. Sometimes quite a few.

Under such circumstances the listing agent tells the buyers' agents, "we'll consider all offers that come in before X time on X day. We'll review them all then. Give us your highest and best offer."

By "best", we mean: Can you be flexible on terms, like the closing date? How high can you go with the due diligence fee and the earnest money? Both show that you are committed to seeing the sale through, barring some disaster found in an inspection. "Best" could also induce you to let a seller know that you're not going to nickel and dime them about every small repair. Wouldn't you love that kind of buyer if you were selling your home? 

There are decisions to make. Talk them all over with your agent ahead of time. Be prepared to move forward quickly. Be honest with yourself, and your agent, about what you can really afford. It can be a relief to set limits. Make sure you either have proof of funds (if it's a cash offer), or a pre-approval letter from your lender. You will notice on the Offer to Purchase and Contract form, that there is a box to check asking whether either is accompanying the offer. Needless to say, it's a stronger offer if the supporting document is there. Have you noticed some homes going back on the market? Sometimes that's because a buyer's funding fell through.

So, the bidding process is not really warfare. It's all about mindset. The agents do all the work. All you have to do is make up your mind, and wait. It is disappointing to lose out on a home. And that might happen, so be prepared to rinse and repeat. You'll win eventually. Managing your own expectations is half the battle.

In short: Don't show up for the war. Show up for an opportunity!