Merit Real Estate

How to Win a Bidding War

February 10, 2016

  Best Offer White Real Estate Sign Home For Sale Bid

        There’s no denying it, we are in a very hot real estate market here in Southern California. How does this translate in to our daily routine in the real estate industry? Good times for sellers, rough times for buyers. I can’t remember the last time I had a client place an offer on a house on the open market without being in a multiple offer situation. I am sure many buyers are in the same predicament. Some may call me stupid, or consider it blasphemous to give away the experiences and techniques I’ve learned the hard way through the painstaking ordeal of placing 25+ offers for clients before getting one accepted. But in the interest of transparency, there are a few things I have picked up along my journey that may be of help. I am not going to pretend I came up with all of them, as a lot of these things may be common sense, and some of them may be ideas I have picked up from other agents.

        Let’s start with the most important thing—LISTEN TO YOUR REALTOR. We do this for a living. You can scrap everything I write here, as long as you listen to a Realtor who knows what he or she is doing. Find someone you trust, and let them guide you.

        Next—price. For most sellers, it’s all about the bottom line. So in this market climate, know your data. If you are going after a house that’s 2500 sq. ft., asking $999,000, and a similar house down the block just sold for $1,025,000, know that you’re in for a bidding war. The first mistake buyers make when entering the market is thinking that an asking price is a seller’s goal price. Most sellers realize nowadays that a bidding war can work in their best interest, and they are playing up to it. Come in strong, give it your best shot right off the bat. If the last house sold for $1,025,000 and you’re in a hot market, be prepared to offer at least that.

        Next, there are the rest of the offer terms. Do whatever you can to make your offer appealing to a seller, within reason and within your capabilities. If you are flexible with how much you can put as a down payment, or don’t need a loan (if only we could all be so lucky), waive your appraisal contingency. And if you don’t need a loan, shorten your escrow period. Find out the seller’s position, and be flexible. Most of the time they will want a quick deal, but sometimes they prefer a longer escrow. It’s a seller’s market, so, find out what the seller wants, and do your best to please them. Also, shorten your investigation period. CAR default contracts leave it at 17 days. Unless you have a stream of inspectors lined up that need to evaluate many different aspects of the house, you likely don’t need those 17 days. Show the seller that you mean business and shorten that to 7-10 days. You should have no problem getting a home inspector, termite inspector, mold inspector, etc. to a home within a week’s time.

        Then, there’s the personal connection. Work with a local Realtor. Find someone who knows the neighborhood, and has a good reputation. You’d be surprised how far that can go when you are trying to get your offer accepted. It’s a harsh reality, but an agent coming to Redondo Beach from Encino and submitting an offer for a client probably will not be taken as seriously as a local agent who has a reputation in the neighborhood, and a rapport to uphold with his or her peers in the local marketplace. It’s a small real estate world; find someone you can trust with a reputable name and from a reputable brokerage.

        Lastly, as cheesy as it may sound, tug at the sellers’ heartstrings. Write them a letter. Tell them what you love about their house. Tell them how you can envision yourself living there. Something as simple as a cover letter can help you establish a connection with the seller. Make the seller want you to get their house over the competitors.

        Oh, and be persistent. Don’t get discouraged at rejected offers, or from being outbid. It’s all business. Keep moving forward. When one door closes, another opens, in this case, literally.

P.S. I have to reiterate, listen to the advice and guidance of your Realtor! Everyone is different. Your Realtor should get to know you and be able to cater to your needs. Everyone works differently. This is just my 2 cents.

 -Rodman Amiri