How to Win a Bidding War on a House Without Overpaying!
In competitive markets like South Jersey and suburban Philadelphia neighborhoods such as Collingswood, Haddonfield, and Media, buyers are often competing against multiple offers within days of a home hitting the market.
Let’s look at some bidding war tips
First Note: DATA MATTERS
Real estate market conditions are hyper local!
It is important to have a pulse on what is happening in the community where you are buying (OR selling) in order to properly strategize a competitive offer. National headlines provide great base knowledge, but the actual supply and demand varies drastically from one zip code to the next. Honestly, even the same neighborhood could see varying demand if one pocket of town is more desirable than another.
Your first task should be to research the current housing trends in your area. Ask your agent to pull the data showing the current inventory levels along with recent sales.
The Months Supply of Inventory (MSI) will show you if the market currently favors Buyers or Sellers. A balanced market has around 6 months supply. If it’s less than 6 months, you may find the available houses to be lower and potentially creating buyer competition.
When reviewing the recent sales, take note of how long homes sat on the public market and what the list price vs. closed price looks like. If there is a trend of homes going under contract in less than 2 weeks with closing prices higher than their list price, this is a strong indication that the area is experiencing high demand and you need to prepare for bidding wars.
House hunting in a Sellers Market leads to Bidding Wars
I have multiple buyers currently house hunting in ‘high demand’ locations. My recent conversations involve coaching around questions such as “Do you know what the other buyer’s are offering?” and “If I offer $X, do you know if that will be good enough?”.
My goal as an agent is always for my clients to buy confidently and without future regrets.
Here are my primary responses to those natural thoughts:
Trust the Data - We will look very carefully at the data for the particular area the home is. As mentioned before, we want to analyze days on market as well as the list vs. close prices. We also want to take note of how far over asking comparable homes pushed. This will show us what other buyers in the same market were willing to do in order to win the house.
Strategize with your Agent - The listing agent is not likely to share much detail around other offers.You would be pretty frustrated if a listing agent shared the details of your offer with another buyer. ‘Shopping Offers’ for your client is something an agent can be fined for, so please don’t ask agents (this is for buyers or sellers) to put themselves in a position to jeopardize their license.
They may provide basic information though: how many offers are on the table, if any of them are over asking, what additional terms the Seller is most interested in. Your agent can have a conversation with the listing agent to help gain some insight to help guide a competitive offer that works for you.
Stop the Guessing Game - Trying to guess what the other offers are will drive you crazy. Instead, focus on the data and your personal threshold.
That sweet spot is going to be this: How strong are you comfortable pushing for this particular house + What number is stretching too far where you would say no thank you?
NO REGRETS: If someone else is willing to push a bit higher, you need to be willing to say “good for you… the house is not worth that to me.” and move on. You should have no regrets and be at peace knowing you put your best foot forward without overstretching. ALSO - Don’t push too far where you win the bid and then go “Yikes… what did I do?!”
Additional Terms - Remember that the number the seller is most interested in is their NET PROCEEDS coupled with the smoothest transaction. The highest purchase price doesn’t always mean the highest net proceeds! There are additional terms to consider when structuring your offer that may be attractive to a seller. Your agent should be sure to clearly highlight your terms when presenting the offer.
House hunting in a competitive market is honestly not super fun! It’s very difficult to balance your emotions with smart business decisions. Instead of impulsively throwing numbers around… pause… think rationally… regain control.
Trust your agent. Trust the market data. Present comfortable and confident offers. The right house is out there!
If you are ready to get started with your home search, contact us today to schedule a Buyer Consultation!
Email: emily.woods@compass.com