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How to deal with bidding wars without overpaying

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Posted: Thursday, August 1, 2013 2:17 pm

This market is poppin’! Homes are selling like hotcakes. But nothing is more disappointing than to find the home of your dreams, quickly write an offer, get your hopes up; only to find out the home is already pending. Many people are amazed at finding how difficult it is to get offers accepted with the current market situation.

The biggest contributors to our sticky market are a 1-month supply of homes, low interest rates, historically low interest rates, 80 percent of the population being able to afford a median priced home, and 86 percent of 18- to 34-year-olds wanting to purchase a home.

Any one of the above is enough to fuel a seller’s market and push prices up but combine them all together in the same selling season and buyers find themselves in one of the toughest bidding war markets around.

So how can buyers win a bidding war without overpaying? Here are a few items to consider:

  • Work with an area agent that knows the area. Working with an agent that is up to date on area market price is one of the single best things a buyer can do.
  • Be realistic with price. Now that things have heated up, make sure your initial bid isn’t insulting.
  • Pick your “Walkaway Number” – and stick with it. Don’t get carried away by a frenzied bidding war. It’s easy to get carried away. Pick a number at the beginning of your search that is an absolute maximum and don’t stray from it.
  • Be flexible with other terms. While price may be what matters most to a seller, being flexible on other selling conditions can set your offer apart. Let the seller know if you are open to discussing closing dates, moving arrangements, or offering a “rent back”.
  • Don’t dawdle. Homes are selling within days of hitting the market so make sure you are ready to write up the offer once you find a home you like. Previously buyers could take their time and mull it over. Nowadays if a buyer takes too long they will find the home slipping through their grasp and already sold.
  • Connect with the sellers. Write a letter introducing yourself to the seller and make a personal appeal for the home. Offers often look the same on paper, however this tactic helps to “humanize” the offer and set you apart.

Sheri Aguilar is the president of the Lodi Association of Realtors and can be reached at Sheri@YourLocalAOR.com

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