New Yorker’s understand the grueling process of finding a good home in today’s market given the shortage of inventory and increased global buyer demand. In today’s market, bidding wars are commonplace, and properties often sell for 10 to 20 percent above asking price, especially in the great locations near parks and transportation. Therefore, you need to have some tricks up your sleeve to get the perfect apartment without breaking your budget. Bidding wars can be unpleasant. However, they do present an excellent opportunity for reaching an accepted offer and winning a home in comparison to a Best and Final.
Research the Housing Market in Your City
Spend some time researching the housing market in New York City–real estate prices are complicated and not always as stable as they seem, as they fluctuate from year to year and are based on economic factors. For example, when moving in the summer, it’s more expensive because there are more buyers; however, there are more homes available in the summer. If you know that it’s a seller’s market, you’ll know when to enter a bidding war and when to back off and look for something else. Consider and estimate a home’s fair value as well as market momentum before overpaying.
Be the First One to Make an Offer on the Home
Once you’ve found an apartment or townhouse that you like, submit a written offer as soon as possible. Sometimes, all sellers care about is quickly turning over the property. Therefore, you can avoid a bidding war entirely if you beat other buyers to the punch by carefully watching your desired area for new listings. Just be prepared that this isn’t usually the case, but it’s worth trying.
Make Yourself More Appealing
If you’re trying to encourage the owner to accept your bid immediately instead of waiting for a better deal to come along–or hoping the two of you get into a bidding war–try making your offer look as appealing as possible. Numbers talk but so can you. Include a letter to the seller in the offer; you may not be able to meet the seller, but you can tell them about yourself in the note. People become attached to their property and would often prefer to sell to someone that appreciates their effort as long as the offer is also strong.
Check on the Status of a Real Estate Bidding War Every Day
If you’re trying to win a bidding war on a property that’s in a popular area of New York City, make sure to follow up on your offer every day–and sometimes twice a day. Try to have the broker give you an idea of the current highest bid. Brokers usually won’t release the price of competitive bids, but they may provide a hint to motivate you to outbid the other potential buyers. You have to be careful not to become irrational or go over your budget, and it’s also important to have realistic expectations about what the home is going to cost you on a monthly basis. The more popular the area and desirable the home, the more expensive.
Additional Tips to Increase Your Chances
- Submit your highest and best offer to increase your chances of winning the property and avoiding a best and final.
- Consider waiving all contingencies except a mortgage contingency unless you’re able to put more money – down or purchase the property in cash.
- Accommodate the seller’s needs. Offer to close quickly or later depending on a seller’s preferences.
- Prepare a REBNY financial statement in advance and attach it to your offer.
- If you’re financing your purchase, attach your pre-approval letter.
Avoid a Best and Final
Do all you can to avoid a best and final. A best and final is typically held when a seller has received several offers and will ask all bidders to submit their highest and best offers. A best and final offer is necessarily the highest and best price the buyer is willing to pay without the option of sending another offer. The seller will request that potential buyers only submit one final offer and the highest and most qualified offer generally wins.
These are just a few tips for winning a bidding war. Paying a premium for a desirable well-priced home is the only way to get into the market today. Instead of looking for homes that could break your budget, search for apartments 10 – 20 percent less than the highest amount you’re willing to spend. This will give you a chance to find a home and get a deal done. It’s a hard task, but if you’re dedicated, you’ll get an excellent home in one of the greatest cities on the planet. Do you have any other tips for people trying to find an apartment in New York City? Share your advice in a comment below.