How to Win a Bidding War like a Pro

  As a full time Broker in a hot market, I have seen my fair share of bidding wars play out. These heated contests for properties can be stressful for buyers, but with the right strategy and preparation, it is possible to come out on top. In this post, I will share my tips for winning bidding wars and securing your dream home.

Speed: When you realize you want the home but there are multiple offers, your agent needs to drop their Café Mocha and get a written offer over to the seller’s agent immediately. Find out how many offers are on the table and if there are any hints as to how “strong” they are, and I mean do this while you’re standing in the living room of the home. Why the rush? The seller is free to accept any offer regardless of any deadline that has been set and typically better offers roll in as more time passes. If your offer hits the sweet spot, they may take it right then or inversely, it could sell out from under you while your “sleeping on it”.

Intel: Knowledge is powerful. The more you know about the seller (without hiding in their bushes) the better. If you understand their situation and needs, you can make your offer stand out.

Introduce a new metric: Using what you know about the seller, add a new element to your offer. Real life example: The seller’s mom recently passed away and they have a house full of old furniture they don’t know what to do with. Make an offer on the personal property to sweeten the deal.

Flexibility: Have your agent ask the listing agent what terms the seller is looking for. Do they need to stay in the home for a while after closing? Are they trying to close quickly? Keep an open mind and be willing to do whatever it takes.

Cash is King. If there is any way to make your offer cash, this will certainly catch the seller’s eye. They know there is less risk in a cash deal with no lender involved. If an all-cash deal is not possible, present your pre-approval or approval letter from your lender with the offer.

Go big: If you’re looking for a bargain, this is not the situation for you. It’s just a matter of how much over asking price you should bid. However, always look at the recent comparable sales in the area. Keep your calm business brain engaged and don’t go overboard. Be wary of there being only one competing offer as it could be low or even fake.

Risk more: Put down large deposits to let the seller know you mean business. When the listing agent presents all the offers to the seller, they will notice a buyer who has more skin in the game.

Keep the door open: Let the seller know that you are open to any changes that would make your offer acceptable.

Don’t rock the boat: Do not ask for a home warranty, seller paid expenses, or have any other complications on the contract.

Having a great agent. your agent needs to be focused and experienced. They need to communicate in a calm professional manner with the listing agent without seeming pushy. Also, getting every little detail correct on the documents is a must.

Love letters: These personal letters to sellers have fallen out of favor because they tend to violate the Fair Housing Act by revealing protected information to the seller such as familial status, ethnicity, sexual orientation etc. Especially when photos are attached. Many firms will not even accept them. However, there’s nothing preventing the buyer from communicating with the seller. If there’s something you think will help your cause, communicate it through your agent.

As-Is: This is a tricky one. I don’t recommend you ever buy a home without inspecting it first. Waiving the Due Diligence period (inspections) is generally a bad move. If the situation calls for it there are other ways to communicate to the seller that you will not be asking for any repairs, but you need to find out about that sink hole.  Note:  There's really no such thing as "As-is".  Repairs or credits are always on the table.  You'll need to size up the competition before asking for anything, and only ask near the end of Due Diligence.

Appraisal Addendum: This is a good tactic to reduce the seller’s anxiety about your loan. You’ll have to have enough cash on hand to make up any difference between the appraisal and the agreed upon sales price.

Desperate Measures: If you find that you’re considering complex strategies such as escalation clauses or you’re buying the seller a new car or anything else over the top, may I suggest that you should wait until the market normalizes before buying. These desperate measures are a red flag that you’ve become emotionally investing in winning and have lost perspective.

The home may have increased in value every year for a decade, but you don’t want to be the buyer who buys at the top before a market crash. Never be “the last chump”.

Winning a bidding war requires preparation, strategy, and a little bit of luck. By following these tips, you can increase your chances of securing the property of your dreams. Good luck and happy bidding!

Matt Jones, MBA, Broker/General Contractor

Asheville, NC

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