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New Yorkers understand the grueling process of finding a great co-op, condo, or townhouse, given the genuinely great homes/inventory shortage. Unfortunately, it is not uncommon to find yourself in a competitive real estate bidding war when encountering a great property. Read on for ideas on handling and winning a real estate bidding war.
What is the Bidding War?What is the Bidding War?
Bidding wars for real estate can be unpleasant. However, they present an excellent opportunity to reach an accepted offer and win the home compared to the best and final scenario.
Depending on market sentiment, real estate bidding wars can be commonplace. Properties can often sell 10 – 20 percent above the asking price during a reliable seller’s market or a one-of-a-kind property. Especially true for exceptional homes in great locations near parks, lifestyle amenities, and transportation. Therefore, you need to have some tricks up your sleeve to get the perfect apartment or house without breaking your budget.
Research the Areas Housing MarketResearch the Areas Housing Market
Understanding the hyperlocal housing market is essential. Real estate prices are not always as stable as they seem; they fluctuate from area to area, year to year on economic factors, and as we have now experienced in a Pandemic.
Pre-COVID, moving in the summer is more expensive because there are more buyers; however, more homes are available. If you know that it is a seller’s market, you will know when to enter a bidding war, back off, and look for something else.
Consider and estimate a home’s fair value and potential downside risk, market momentum, or lack thereof before overpaying.
Be the First One to Make an OfferBe the First One to Make an Offer
Once you have found an apartment or house you like, submit an offer in writing as soon as possible. Sometimes, all sellers care about is quickly selling the property. Therefore, you can avoid a bidding war if you beat other buyers to the punch by carefully watching your desired area for new listings. Additionally, being a prepared buyer goes without saying. Also, be prepared that usually, this is not the case but worth trying.
Make Yourself More AppealingMake Yourself More Appealing
Try making your offer appealing if you’re encouraging 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. Numbers talk, but so can you. Please include a letter to the seller in the offer to purchase; you will likely not meet the seller, but you can tell them about yourself in the note. People can become attached to their property and often prefer to sell to someone who appreciates their effort as long as the offer is substantial.
Check on the Status Every DayCheck on the Status Every Day
When trying to win a bidding war on a property in a popular New York City area, 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 will not release the price of competitive bids, but they may provide a hint to motivate you to outbid other potential buyers.
You have to be careful not to become irrational or go over your budget, and it is also essential to have realistic expectations about what the home will cost you every month. The more popular the area and desirable the home, the more expensive it can be.
Additional Tips to Increase Your ChancesAdditional Tips to Increase Your Chances
- Submit your highest and best offer to increase your chances of winning the property and avoiding the best and final.
- Consider waiving all contingencies except a mortgage contingency unless you can put more money – down or purchase in cash.
- Accommodate the seller’s needs. For example, 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 FinalAvoid a Best and Final
Do all you can to avoid the best and final, a.k.a highest and best. The best and final called when a seller had received several qualified offers. The seller will then ask all bidders to submit their highest and best offers to purchase.
The best and final offer is 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 bid generally wins.
These are just a few tips for winning a real estate bidding war. Paying a premium for a charming well-priced home can often be the only way to enter the market.
Instead of looking for homes that could break your budget, search for apartments 10 – 20 percent less than the highest amount you are pre-approved in a seller’s market. It gives you a chance to find a home and get a deal done. It’s a challenging task, but if you’re dedicated, you’ll get an excellent apartment in one of the greatest cities on the planet.