Q. How Do I Win A Competitive Bid?
A: In today’s market this question is coming up more and more often. As a bit of back ground – let’s set the stage: Imagine you have found the “prefect home” and you are all set to place your bid on it. However you are not the only one. You feel that others may also think its their “perfect home.” It is likely in this case that several buyers have decided to place a bid on the very same property you want to claim as your own. Now what? What’s the best way to “Win the bid?”
Each property is different but here are some general points in a competitive bid:
First consider some factors:
1. Financing: What type of financing are you approved for? Typically speaking sellers prefer cash, a close second is conventional financing. Are you in a position to make an offer with either of these on your side? If financing what is the most you could put down? Often to a seller the more you are willing to place down the stronger they view you as a buyer. Side note about closing costs: Closing costs are an expense a buyer pays for. Asking a seller to “cover your closing costs” impacts their net. The strongest offer you can make is to find a way to cover your own closing costs.
2. Keys: What is your time frame for getting keys to the home. Are you able to wait? If so – this could really help you be in a great position. Many times in today’s market the seller needs time to move into their new home. If you are able to wait (or are willing to) make mention of that in your offer. Give the seller the possession time they are requesting. Sometimes buyers charge the seller rent for their time in the home after close – but you could consider waiving that fee or reducing it – again gaining favor over others.
3. Contingencies: Items such as survey, inspections other items are important to ensure you understand the home you are purchasing. It is very common for a buyer to request time to have the home inspected, and to obtain some type of financing. Not very many buyer will waive inspections – and its not something I recommend. However from the sellers perspective if an offer comes through with no inspections – that offer has one less contingency than the rest. A survey is often a very good idea to understand the property boundaries and potential easements. Protecting yourself is important but certainly you can write the offer that has you paying for the survey instead of the seller.
4. Price: We are speaking about price last, because frankly its one of the top things people consider. But price doesn’t always win. Its always a big factor but the about #s 1, 2 and 3 when written well will put your best foot forward in combination with price. In today’s market it is not uncommon to have prices go over and above the listing price on the home. Sometimes as much as 10% or more. So write strong (high) and write to what you feel is your top offer.
5. Timing – if you like it – don’t wait! This is more a tip than anything else – if you like the home and it feels right – put in your offer. Its better to take action then wait in today’s hot market.
The unique thing about a home purchase is that literally every piece of property is different and there are several other factors as buyer’s agent we do to ensure the best foot forward for our buyer. But the above are great areas to concentrate on when preparing your strongest offer. By concentrating on these before you are in this situation you can be the best prepared.
As we represent our buyers, we are always looking our for their best interest and welcome questions. Should you have questions about this or any other real estate topic, feel free to reach out.