Strategies for Winning Home Bidding War
The white stucco house in Torrance was 40 years old but charming--with a new kitchen and a fresh coat of exterior paint. And it was in a tree-lined neighborhood served by award-winning schools.
The first day the home popped on the market, a young couple visited there twice and concluded it was just what they wanted. Early that evening, they returned with their agent to submit an offer on the place.
Wisely, the agent had the couple wait in her car outside the home for a full hour until details of the deal could be worked out between the two parties.
That way, the buyers were available to sign off on slight alterations to the terms, without any time delay--which might have cost them the home.
“They bought the house right out of the chute,” said Helen Soesbe, a broker-associate for Re / Max Execs in Torrance, who represented the young couple.
In many prized communities of Southern California, quality properties offered at a fair price are in extremely short supply, Soesbe said.
Savvy agents have strategies for helping buyers in competitive markets beat out rivals seeking the same property. “You have to get into that hurry-up-and-move mode,” Soesbe said.
Here are four pointers for buyers searching in neighborhoods where sellers have the upper hand:
No. 1: Have your agent prepare multiple contract bids.
“When I know I’m in a really hot market and my clients are competing for a home, I’ll write up five different price offers at the same time,” said John Rygiol, the owner of Buyer’s Broker, a Seal Beach-based real estate company that works only with buyers.
That way, Rygiol has several signed contract offers at different price levels, ranging from below list price to above, depending on what he deems necessary to top the competition.
In a multiple-offer situation, when several agents are presenting the owner with offers at roughly the same time, Rygiol likes to arrive early for his appointment.
Although he cannot be present when the other agents outline their offers to the homeowner, Rygiol lingers outside the home, chatting with the other salespeople while they wait their turn to be heard. That way, he often gets clues as to what the other bidders may be offering and how high his buyers will have to go to obtain the property.
As a buyer, of course, your goal in competing with others is to pay no more for the home than is necessary to achieve your goal.
No. 2: Don’t let your agent fax your offer to the listing agent.
There are several advantages to having your agent present your offer in person, rather than simply faxing it in, according to Rygiol.
An offer that’s presented directly to the homeowner (who usually has his own listing agent present) will seem more personal and therefore more persuasive.
In presenting your bid, for instance, it’s a good idea for the buyer’s agent to convey to the owner what you like about the home--since many owners take pride in their properties and will favor someone who appreciates their place.
In addition, having your agent go in person gives him a better feel for whether other offers are actually coming in as expected.
Suppose, for instance, that you’re excited about making a bid for a townhouse in a coveted community.
You find the house on a Saturday and decide you definitely want to bid on the place immediately. The listing agent tells your agent he expects three offers to be presented Saturday between 6 and 8 p.m.
Your agent arrives at the house at 5:30 p.m., well before his 7:30 appointment. He sits outside in his car, awaiting his turn and catching up on paperwork.
To his surprise, the other two agents don’t show up. So when he goes in at 7:30 p.m. to present your offer, he does so with the knowledge that the competition is not as fierce as expected. As a result, you can feel safe in bidding more conservatively than you might otherwise have done.
“Sometimes these supposed ‘other offers’ don’t materialize,’ ” Rygiol said.
No. 3: Avoid the urge to pay way too much when the competition is heated.
Beverly G. Pickrell, an agent for Prudential California Realty in Thousand Oaks, said it’s often necessary to offer more than list price if you know other bidders are as intent on buying the house.
Still, how much over list you go depends on the price range in which you’re shopping, Pickrell said.
In the bottom third of the Southern California price spectrum, a relatively small sum--perhaps even $100--can raise you over the competition and give you the winning bid.
On a mid-priced home you may need to go over the list price by $2,000 to $5,000. While on a home in the top third of the region’s market, it may be necessary to top the list price by $10,000 or more to prevail over rivals, Pickrell said.
All this assumes, however, that the list price was set correctly at the outset--which is not always the case.
The only way to be confident that the list price is more or less in line with the true market value of the place is to ask your agent to research comparable sales that have occurred in the neighborhood recently, Pickrell said.
If you find yourself in a bidding war over a home that was overpriced in the first place, you may want to bow out to avoid risking an excessively high bid that you’ll regret when it’s your turn to sell.
No. 4: Submit a clutter-free contract.
Suppose you have your heart set on a place, and you are certain that multiple bids are coming in on the condo, which features a gourmet kitchen and a lovely view.
Then, to compete with the others, you’ll want to give the sellers a contract as free of special demands as possible, Pickrell said. Do you really need the old refrigerator the sellers would rather keep? Then why not strike from your offer a request for the refrigerator?
What’s even more important is to strike out any conditions on the purchase that you can live without. For instance, you could win over a seller looking at multiple offers by removing a clause that makes the purchase of the new house contingent on the sale of your current one.
“Make your offer as clean as possible, Pickrell stressed.
Distributed by Universal Press Syndicate.