As recently noted, the local real estate markets were very competitive in January. I had clients involved in two bidding wars during the month. They were quite different experiences.
Property #1 was in a premier location, with an excellent layout, but it needed a considerable amount of updating. The asking price was set rather low, and it attracted a lot of interest immediately. My clients liked the home, and agreed that the asking price was too low, so they quickly submitted an offer well over asking.
Property #2 was in good condition but had been on the market for a long time. The seller had done a price reduction about a month before, but still wasn’t seeing much interest despite the home being quite large and in a good location. Its challenge was that it had a big addition that gave it a non-traditional layout. My clients liked the home, but not the price. After being told that someone else had submitted a bid, they decided to make an offer below asking just in case their competition valued the home even lower than they did.
When people hear that there is a bidding war, they usually assume that the winning offer is above the asking price. That’s not always true. Sometimes a property can receive multiple offers with all of them below asking.
The key to navigating a bidding war is information and confidence. First, you have to have a strong understanding of the current value of the home. You need to know if the asking price is fair, too high, or too low. Next, you need to decide what the home is worth to you. Based on those two factors, you need to feel confident about the offer you submit.
Buyers only get one shot in a bidding war. If they win, they need to feel they paid a fair price. If they lose, they can’t have any regrets about their offer. The best way to gain that confidence is to pay close attention to the market, and learn about the pricing environment. Having a knowledgeable real estate agent on your team can help quite a bit, but you need to be paying attention to the market too. Buying a home is a team effort, and that’s especially true during a bidding war.
So, which property do you think my clients have under contract, property #1 or property #2?