Over the last three years, my real estate team has been involved in over 150 bidding wars, mostly as the seller’s agent. We’ve become experts at it and I’ve personally taught classes on this subject at the Kansas City Realtors Association in Overland Park, Kansas. I could probably write an entire book on the subject of what I’ve learned about negotiating multiple offers during the last few years, but there is one thing that amazes me the most. I’m perplexed when another agent tells me, “My client won’t be writing an offer on your listing because he doesn’t want to get into a bidding war.”
Let me begin by acknowledging that I do understand there are some people that are not comfortable with bidding wars, whether it’s buying a home, or anything else. These are the people that feel awkward at a public auction. They like to take their time when making a big decision. Buying a home is a huge financial step and they either don’t want to feel rushed or they are just not comfortable bidding up the price of the home. As I said, I understand that. In addition, I also agree you should never pay more than you are comfortable with, or buy a more expensive home than you can afford.
But, having said that, as a buyers agent, I cannot control when a home will get multiple offers. Homes that have multiple offers have multiple offers for a reason. Usually, that reason is they are one of the best homes for the money, in that particular area. So for these buyers that aren’t willing to compete, what are they supposed to do? Wait for something not as appealing to come on the market? That doesn’t sound like a very good plan to me.
Buyers and sellers need to understand the market they are in and my personal opinion is that their real estate agent should be explaining this to them. Are we in a strong buyers market (2008-2012), a balanced market (2013-2015) or a seller’s market (2016-present)? Buyers need to understand that in today’s seller’s market, the inventory of available homes is low, so you may need to compete for the very best homes. Maybe that means you write an offer for $5,000 to $20,000 over the sellers asking price if you want to win.
Just the other day, I was passing through the Keller Williams office and overheard a buyer tell his agent “We are not going to get into a bidding war on a home.” I thought to myself, “So you’d rather buy a home that isn’t drawing the same interest because it’s priced too high or not in top condition and that way you can WIN that house without having to compete? Is that really winning?”
When one of our buyer clients says this to us, my team member simply suggests they not look at any homes that haven’t already been on the market for at least seven days. That way, they reduce the odds of getting into a bidding war because bidding wars usually happen in the first 72 hours after the home hits the market. It’s a simple solution but still doesn’t guarantee the home they love won’t get multiple offers. As I said earlier, we don’t have any control over that. I’ve seen overpriced homes drop their price on day 30 and then get multiple offers because they are now at the right price.
This last Monday I was speaking with one of our past clients and he said, “You know Ron, when we bought this home two years ago, I was pretty nervous. We got into a bidding war on this home and paid $7,000 over the sellers asking price. At the time I worried about whether that was the right thing to do. Last week our neighbor put their home on the market for $20,000 more than we paid for our home and they are now under contract. Looking back on our home purchase, I’m so glad we did it. This is a great neighborhood and the home values are clearing rising quickly. If you would have told me two years ago that our home would increase $20,000 in value, I wouldn’t have believed it.”
That’s the story I want to tell the buyer that says he does not want to compete for a home.