|How To Win A Real Estate Bidding War: Advice From The Pros
By Ellen Paris
How to win a real estate bidding war in today’s home buying market is a fine art. From Los Angeles to San Francisco to Boston offering a home’s asking price is just the starting point in negotiations.
In Long Beach, California, Breanna LePante of Nook Real Estate recently got her client’s offer for a 1,000 square foot condominium to stand out from 21 competing offers. How did she do it? I always have my buyers write a nice letter to the seller telling them how much they want the house. I continually communicate with the listing agent. I also make sure my buyers have pre-loan approval with proof of funds. LePante confides. Her buyer got the property for $375,000 against an asking price of $349,000.
Ron Shuffield, President of EWM Realty International with offices in Miami and Fort Lauderdale has three decades of industry experience.
Everyone wants a deal and everybody has the same information today. Your real estate agent should know about offers. Be prepared to go above the asking price initially, Shuffield explains. If you can make your deal as clean as possible without financing contingencies, that is a big deal to a seller. In multiple offer situations you don’t get a second chance to bid, he adds.
Bidding wars are fast, furious and nerve racking. Know the actual market value for a property. Decide what price you are comfortable paying and will feel good about when moving day arrives.
Listen to Paul, Habibi, Continuing Lecturer of Finance and Real Estate at UCLA Anderson School of Management. Have a plan in place where you know you what your number is before you even make your offer. Buying a personal residence that others want causes people to make irrational judgements based on emotions. They have a skewed view of the property’s fair market value. Make sure your offer is as strong as it can be. Contingency periods and length of escrows do make a difference to eager sellers, Habibi advises.
Ben Belack, Director Residential Estates at the luxury real estate brokerage firm, The Agency in Beverly Hills teaches seminars to real estate agents on the topic. Properties are priced low to create maximum awareness and excitement. However that doesn’t mean a buyer is over-paying. In the Los Angeles market today, buyers looking at properties up to $1.8 million can expect to automatically be in a multiple offer situations. According to Zillow there are more than a dozen single family homes listed in desirable West Los Angeles, with the lowest at an auction price of $1.57 million. The list price has become more of a sales and advertising tool and less of a metric of value. Belack adds.
In San Francisco according to Zillow the median home value is a staggering $1,285,000. Bidding wars there are as common as the City’s infamous fog. Nina Hatvany, Luxury Property Specialist at Pacific Union and the top residential sales agent in San Francisco from 2008-2015 and 2017 shares her on-the-ground experience.
Clients who don’t get a property tell me after, they would have bid higher. In this type of market, you must come out of the gate with your best offer. Having strong relationships with listing agents and communicating your buyer’s enthusiasm makes a difference. A 1,650 square foot home with full ocean view in San Francisco’s Sunset District listed at $1,250,000. It recently sold to Hatvany’s happy buyer for $1.6 million.
Boston’s David Bates, a long-time Broker Associate at William Ravis Real Estate has years of bidding war experience.
One of the first things I learned as an agent was to prepare my clients to be in a bidding war. If my clients didn’t know that was a possibility or in today’s market maybe a certainty, they wouldn’t feel comfortable doing all the other things that it takes to win a bidding war. Sometimes the agent starts asking them to do these wicked aggressive things, the buyers feel pushed and just won’t do what it takes.
William Hardin, PhD, Professor of Finance and Real Estate and Director of the Hollo School of Real Estate at Florida International University in Miami provides some stats.
If you look at 2% to 4% of sales nationally there have been some type of bidding component involved. Today it has jumped to around 10% to 11% mainly in urban areas with younger buyers and increasing incomes.
Mark Hughes, President of Nook Real Estate has worked in residential real estate sales and management for years. Hughes sums it up well.
From my experience the loser in a multiple offer situation always ends up thinking, I should have gone higher. It takes a few times to not get that house you want so much to be able to offer what it takes to win.
Do work with a real estate professional who has a solid track record and strong relationships with other agents to give them the insider info needed to make the deal.