As the weather warms up, so does the real estate market. According to the National Association of Realtors, one-third of all U.S. properties sold in March closed at or above the listing price. This likely means some stiff competition among buyers throughout the seasonally strong Spring and Summer months.
Concerns that the low interest rates available now will rise before year end is also driving demand higher and contributing to the low inventory. Low interest rates bring down mortgage payments which allow more people to enter the housing market.
More competition over limited supply breeds multiple offers that often lead to anxiety provoking and frustrating bidding wars.
Sellers are looking to take the best offer they can get for their property. This often means more than just “price.” As a buyer, learning the strategies that work to win a bidding war can mean the difference between winning or losing the property of your dreams!
Before you start your search for a home, it is beneficial to get your finances in order. It is best to bring as much cash to the table as you can and to be preapproved for your loan through a lender or mortgage broker.
Once you have done your research and know present market values in the desired area, you should be ready to make an offer at a price that is within your “comfort zone.”
The best way to secure the house you want is to write an offer as soon as you have seen the property. Low-balling is not a good strategy in hot markets. Generally, it is best to make an offer strong and early to try to avoid a multiple offer situation.
If you are willing to go higher, you can add an escalation clause in your initial offer. The clause sets out the amount of money the buyer agrees to pay in the event there are competing offers. However, it is advisable to put in a cap which stipulates that regardless of the escalated price you have offered, you will not go more than, for example, $2,000 over the highest bid.
A home pre-inspection can be helpful. Even though you may need to spend a little money for these inspections, knowing what challenges you will face at the new property can help you determine exactly what purchase price makes economic sense and can help eliminate other potential multiple offer bidders. It demonstrates your seriousness to the seller about moving forward with the purchase.
If you really love the house and imagine your family living happily there, make sure the sellers know that! Sellers want to know that the house they loved for so long will go to another person who will love it as much as they have. You can write a personal letter to the owner for your broker to deliver.
That being said, make sure you are making a smart decision. Do your research on the neighborhood and past prices around the area. Know what your budget is and stick to the budget so you do not have buyer’s remorse.
If you are in the market for a new house, know that competition will be there. With this knowledge, you can prepare yourself for a potential bidding war and winning strategy.
For a free courtesy consultation, or information regarding mortgage brokers, contact Bess Hochman, a top Westside Real Estate Broker for more than 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys and others experts specializing in the issues referenced in this article.
Contact Bess by phone at 310.291.4111 or email Bess.CenturyCityNews@yahoo.com. “Bess is a master negotiator!” says Michael Donaldson, attorney and author of “Negotiating For Dummies.”
