Competition is tight among home buyers. Housing inventory is low, interest rates are low and home buyers are competing against each other for desirable homes. It is the perfect atmosphere for the ever dreaded bidding war!
CNBC reports that over one third of all homes for sale nationwide went over asking price.
Lets take Tewksbury MA. The Tewksbury Real Estate market shows 153 properties sold in the past 6 months. ( I removed all new construction that sold as they skewed the numbers even higher) What does the data show?
- All the homes sold for an average of 1.6% below the asking price of the homes for sale.
- 35 out of the homes 153 that sold or 22.8% sold for over asking.
- 18 out of the 153 homes that sold or 11.7% sold for the asking price.
Win the Bidding War
Get your financial house in order- Work with your real estate agent and mortgage broker and get a solid mortgage pre-approval before even looking at homes. A seller wants to know you can close. Buyers offers with weak pre-approvals will automatically be thrown out of the mix. A savvy listing agent will ask to call your mortgage broker to assess how thorough of a job the broker has done to issue your mortgage pre-approval.
Come in Fast- Develop a methodical strategy to find the new homes that will suit your needs. This does not mean bouncing from website to website. I means be highly focused and working with your agent and the tools they provide for you to find the homes quickly.
Come in Strong- How you handle yourself and your initial offer will send a message to a seller and the listing agent. You want to stand out and show the seller you want the house not only in what you offer but also how you handle yourself. A seller does not want to tie themselves up with a nit picky, wishy washy buyer, especially when they have a few buyers to choose from.
Use and Escalation Clause- An escalation clause states you will pay x amount more dollars than the next highest offer up to x amount of dollars. it takes some of the guesswork out of the bidding. I have been highly successful using an escalation clause when I know we are in a multiple bid situation.
In this real estate market, you cant avoid multiple offers on good homes. Don’t shy away from a multiple offer situation, just put your best foot forward. If you don’t get the home, you know you did the best you could. You alsojust might win the bidding war and get the home of your dreams.
This article, Win the Bidding War Against Other Home Buyers, was written by Kevin Vitali of EXIT Group One Real Estate. If you would like buying or selling a house call me at 978-360-0422.