It started early this year, and so far, there is no letup. Ugh!
Recently, I listed a pretty house in my neighborhood. Within five minutes of going live, my iPhone started to dance around my desk. And over the next few days, people were lined up waiting to get in. Three days and fourteen offers later, I came up for air after an aggressive bidding war had ended. We had a happy seller, the happy buyers who got the house, and thirteen other sets of buyers who were disappointed.
While I’ve been through many of these scenarios and have even gotten pretty good at winning, I learned a lot from this one.
First, winning isn’t only about the best price. It’s about minimizing the seller’s risk that the deal will fall apart without reaching the settlement table, and it’s also about minimizing the hassle factor for the seller. And the three big issues in this transaction (most transactions, actually) were the home inspection and the financing and appraisal contingencies, as well the transition from contract to settlement, and then getting out of the house.
The home inspection contingency gives buyers the opportunity to bring in a professional to check out the home’s structure, systems and appliances. If the buyers don’t like what they can find, they can usually walk away from the deal with their earnest money returned. This can give any seller a serious case of the hives. In this case, most of the offers did not include inspection contingencies, and in four cases the buyers had the home pre-inspected before the offer was written and submitted.
All of the offers waived the appraisal contingency, which doesn’t make much difference in the cases where they kept in a financing contingency. There were many with no financing contingency, but the buyers would still need financing to buy the house. But several offers came from people who had the ability to actually get real money to the settlement table without going to the bank. The winner was one of these offers.
One of the winning strategies for the family who got the home included making the transition unbelievable easy for the seller, including giving her almost two months after settlement to move out. In crafting their offer, these buyers really were able to put themselves into the seller’s shoes – and created the perfect fit.
And keep in mind that most buyers don’t win their first one. It’s hard to take your agent’s advice on strategy the first time. After going through a few and coming in second or maybe even fifth, most people start to get serious about creating their winning strategy.
Next week, I’m writing about strategies for competing with cash offers. And sometimes it’s easier than others. How can you assure a seller that you will indeed be able to get a mortgage? How to you deal with the risk of a low appraisal? What can you do before you make an offer that could speed up the appraisal and approval process?
If there is a move in your future, I’d be honored ot help. Please call or text me at 202-549-5167 or email me at firstname.lastname@example.org. If you’d like to see some Monday Morning Coffee archives, please visit my website at www.housepat.com.
Navigating the 2021 Bidding Wars
June 28, 2021