What are Bidding Wars? Multiple Offers?

Creating a bidding war/multiple offer scenario in real estate sales is related to a home seller pricing strategy that is often seen in "Seller's Markets" or when there's more Demand than Supply.

The Seller Strategy

Set A Price Under Market Value

Sellers start by setting a low price. Typically, lower than market value. There is no set amount on how low to set the price. It is generally understood that the sellers are expecting more than the list price. The property is listed on the MLS and other sales channels. The idea is to attract multiple buyers by marketing a low price for the area.

Set An "Offer Date" / Hold Back Offers

The seller will set an "offer date" or "hold back offers" until a certain date and time. Typically, they allow the property to be viewed for a few days or 1 week or sometimes as long as 2 weeks. The length of the viewing window is not set in stone. Typically, this strategy is used when homes are in high demand and tend to sell quickly anyway.

The Result

The result could be:

1. multiple offers (hopefully, more than 2-3)
2. one offer
3. no offers

The seller can choose to accept an offer or reject them all depending on their expectations. They can sign back or ask people to improve as well.

Getting one or no offers is not the ideal result. Re-evaluating the sales strategy would be the next step. There are options to recover and achieve a successful sale as long as you identify where you need to adjust.

There are many variables and options to consider when negotiating any real estate transaction!

In high demand markets, buyers eagerly submit offers. When there are multiple offers on the table, gauging what the sold price will be becomes very difficult. Buyers who are against each other in competition for a home often create scenarios where prices get "bid up" to the highest taker.

The Buyer Strategy

Be Ready. A strong offer contains a GREAT price, strong deposit, & likely no conditions.

• We strongly advise to get a mortgage pre approval up front to confirm your budget. This may allow us to write offers without financing conditions.
• Create a bank draft and have it ready alongside the offer. We can then state our deposit is "herewith" within our offer. This gives us a strong advantage. Sellers understand that they do not have to wait for the buyer to submit the deposit within 24hrs, the deposit is made and ready to go.
• We can schedule inspections prior to the "offer date" so we can avoid an inspection condition. (If timing permits. IE 15min showings)
• We ask the seller for preferences - closing date, inclusions, exclusions, any other considerations to give us the edge.
• Consider drafting a letter for the seller explaining your situation, background, & desire for the home. Some sellers appreciate the detail.
• Don't fall in love with the property until the offer is accepted!
• Know your limits & submit your best and final offer out of the gate. Getting an opportunity to change or improve your offer is NOT guaranteed.

In a multiple offer situation the best strategy to is submit your best and final offer. If the home sells above your best offer, there should be no regret. You made your best attempt!