Insight for Buyers Facing a Bidding War
For sellers, getting multiple offers on a house is a dream. But for buyers who have fallen in love with a particular property, hearing that their offer is one of many can be maddening. Having to compete with other buyers means your chances of getting the home will likely be harder.
So what happens when multiple offers come in—and, most importantly, what are the chances of your offer rising to the top?
It’s the seller’s move
When there are multiple offers on the table in a real estate transaction, the seller is in the driver’s seat.
“The seller can accept an offer outright, counter all offers, or choose to counter some of the offers and not others,” says Beverley Hourlier, a real estate agent with Hilltop Chateau Realty, in San Diego.
And price is not the only factor sellers weigh when they look at offers. The buyer’s terms and contingencies are also taken into account, as well as pre-approval letters, appraisal requirements, and the closing time the buyer is asking for.
If your first offer is beat
Don’t lose hope if your first offer wasn’t the top bid—you may get a second chance to impress the seller! Most sellers will ask the buyers who made original offers for their highest and best offer by a particular time or date. That gives you time to up your offer if you really want the property.
Your best bet
Don’t bank on being able to submit another offer, though. You may get only one shot to express your interest in a home, so if you truly love it, your first offer should be the upper limit of your budget.
“My advice to buyers today—especially on homes priced below market value where there are likely to be multiple offers—is to make their highest and best offer first and stick to it,” says Jim Mellen, a real estate agent with Re/Max Peninsula in Williamsburg, VA. “If someone else is willing to pay more than you feel it’s worth, let it go and work on the next one.”
And don’t bid too high. “Too often I see people get emotionally involved and feel like they have to have this house and there is no other,” says Bruce Ailion, a real estate agent in Alpharetta, GA. “They may only need to bid 2% to 5% above the highest offer to get the property.”
One way to make your offer stand out
If you do find yourself falling hard for a house, consider writing a personal offer letter directly to the sellers. Sometimes, writing an offer letter can backfire, but in many cases, that strategy just may work.
“Heartfelt letters usually win the day,” says Kathryn Bishop, a real estate agent with Keller Williams Realty in Studio City, CA. “I have seen owners accept less money because they loved the letter they received. Many sellers here in Los Angeles don’t want their house torn down. They want to sell to a family that may update the kitchen or baths, but will enjoy many years of living in the seller’s beloved house.”