Bidding Games In Real Estate

Bidding is second nature to property investors in real estate.   And there is a process well established for bidding for HUD foreclosures.   How about bidding for a house listed with the main street real estate company?

Bidding is usually the term used when something goes under the hammer at an auction, isn’t it?  In real estate, we can use the term to bid, and bidding to mean offers and counter offers.  And we should question what has brought about a recent increase in this kind of bidding?

Some real estate agents may persuade sellers to list the price low, particularly for houses that previously were unsuccessfully listed with another agent and it did not sell.  This is a selling and marketing strategy for some agents.  A home that was previously on the market for $600,000 may be priced requesting offers around $500,000 and a $2,000,000 luxury home may be re-priced at offers around $1,500,000. Such prices will attract a lot of interest especially when the real estate agent is skilled at marketing.  But wait, this does not necessarily mean that these houses will end up being sold at a knock-down price.  In many cases, when there is a huge interest in a well priced real estate property, several offers may be received and when someone really wants to make sure they win, then they will offer a higher price bid.

It has been suggested that marking prices down to a level that the real estate seller cannot accept is a game intended to attract many interested real estate buyers. Doing this is a crafty way to proceed but it is legal to do this albeit a risky strategy if enough real estate buyers to cause a price hike did not show up to make “expressions of interest” – that’s still an offer in plain English.

At the end of the day, in bidding, the best price usually wins as long as the real estate seller can accept a price. If the best price bid was too low then either the agent did not market aggressively enough to attract interest or the price was still too high.  In this case, the real estate seller must decide to accept a price even lower than it was listed for or try again later, maybe with yet another agent.