Real Estate 101

Bidding Wars Happen. How Can Buyers Win?

Buyers in our area have heard stories of houses selling with upwards of ten offers for tens-of-thousands (or even hundreds-of-thousands) over the list price. Many buyers have even been involved in some of these so-called bidding wars. And we expect to see bidding wars continue through this spring market.

 

Caroline Staudt explains what buyers need to

understand about bidding wars:

 

Every situation is unique.

No two buyers and no two listings are the same. Engaging a thoughtful, knowledgeable buyer's agent to represent you, and only you, in your home search an important first step. Much like the listing agent, whose fiduciary duties are to the seller, a buyer's agent owes her fiduciary duties to  you, the buyer. This enhances the agent's ability to guide and advise you and your family on forumulating the best offer on any given home.

A seller is not obligated to, and may not always, accept the highest offer.

Other terms and factors such as financing (e.g., a cash offer being more attractive than a 5% down offer), closing date, inspections, and even pure emotion of the seller can also factor into a seller's decision. Again, a buyer's agent can work with you to consider each of these terms when making an offer.

Price does still matter.

Win the Bidding War

Sellers may not always take the highest offer, but price does matter - a lot. When considering making a bid well over the asking price, think about what the house is worth objectively by looking with your agent at comparable sales and also what the house is worth to you. Then balance those two factors. Also, depending on your financing, speak with your agent about whether there could be appraisal issues with an offer significantly over the asking price.

There is no protocol for how a seller should handle multiple offers.

A seller reviewing multiple offers may choose to (1) accept the highest offer that comes in, (2) go back to some or all of the potential buyers for a "Best and Final" offer, (3) counter to one of the buyers but not the others, or (4) reject all offers. Provided that Fair Housing and other applicable laws are not violated, there are no rules for how a seller can handle and respond to offers. It is the job of your buyers's agent to arm you with as much information as possible so together, you can prepare an offer that stands out from the crowd, no matter which approach the seller takes.

Use caution when waiving contingencies.

Buyers may hear stories about other buyers waiving mortgage contingencies and inspection contingencies. This approach is not for the faint of heart and has the potential to lead to big problems down the road. While waiving contingencies may be what it takes to ultimately get a specific home, you should be sure to speak to your agent, your lender, and perhaps even your attorney if you are considering going down this path. Your agent should also be able to work with you to formulate a strong offer while limiting your risk.

Remember that not every listing will see a bidding war.

Remember, every situation is unique. Many houses - whether because of price or location or some other intangible factor - will not sell immediately with multiple offers. Do not assume when looking at listings that every house will sell for over the asking price with multiple offers. Do not be afraid to enter into the market for fear of being involved in a bidding war.

Bidding wars are a challenge for buyers. By definition, some buyers will miss out on homes that they want to buy - perhaps even dream homes. There are ways, however, that a buyer's agent can help you through the process to increase the chances of winning the bidding war. If you have any questions  about multiple offers, if you are thinking about buying or selling, or if you want to speak with an agent about current market conditions, please give us a call. 

Today's Homebuyer: Who, What and Where?

From hyperlocal to big picture: Understanding our market

At Better Homes and Gardens Real Estate The Shanahan Group, we love our local market. We spend lots of time looking at data on Winchester, Reading, Medford and our other surrounding communities. We believe that's where the really valuable information is and how we can track the real estate market real-time. There is value, however, in picking our heads up and looking at a broader picture of how our market compares to other areas of the country. Every year, the National Association of Realtors (NAR) prepares a report of Homebuyers and Homesellers. We dig through this report every year for a national picture of consumer trends.

 

Homebuyers: Who, what and where?

Below is a subset of that report, focused on Homebuyers by region of the U.S. This piece of the report is a really interesting look at buyers by region, breaking down buyers by age, type of property etc. Here are some of the things we found interesting:
  • New England's percentage of first time homebuyers is the highest at 45%, with the Mountain region being the lowest at 29%
  • The Mountain region saw the highest percentage of buyers purchasing multi-generational homes (17%), with New England and the North Central region having the lowest multi-generational home purchases (11%)
  • Single female homebuyers represent 19% of purchasers in the North Central region (highest) and only 13% in the Mountain region

Check out the full report here: Presentation: Profile of Home Buyers in Sub-Regions

 

The Most Attractive Buyer

NAR MAP Q-1 Prices

The Real Estate landscape has changed dramatically over last year - sales are up and prices are up.Inventory remains low and as a result, many properties are being sold above asking price - and with multiple offers. The trick is to be the most attractive buyer while still operating within your budget and your comfort level. Let's talk about how:

Preapproval- In this market, the potential buyer who has not been preapproved will not not even make the list. Period. Make sure you're preapproved (not simply pre-qualified) by a reputable bank. When submitting your offer, time permitting, you should have a formal preapproval letter specific to this property, from your lender, stating your offer amount. Contingencies Love Letter Accommodating - Does the seller want a quick closing? Do they want to wait until the end of the school year before moving? Are they also trying to buy and need to get the property under agreement as soon as possible? The more you can work within their timelines, the easier you can make the process for them, the more likely it is your offer will make it to the top of the pile. Responsive Percentage Down Inspection (no nickel and dimeing)