3 Winning Strategies To Win Bidding Wars
With limited inventory of properties for sale coupled with historic low mortgage interest rates spurring a buying frenzy, bidding wars are becoming more and more frequent. Multiple offers are becoming the norm once again, so, it is essential to be pre-approved for a loan before you embark on your property search. This is one way to stand out and make it clear to the seller that you are a serious buyer and more importantly, show that you can afford the property.
Director of Economic Research at realtor.com, Javier Vivas advises:
“COVID-19 has accelerated earlier trends, bringing even more buyers than the market can handle. In many markets, fierce competition, bidding wars, and multiple offer scenarios may be the common theme in the weeks to come.”
Below are 3 proven strategies to make your offer competitive when you're ready to begin negotiations:
1. Be Ready
A recent study by Realtor.com® showed that only 52% of active homebuyers obtained a pre-approval letter before they began their home search. In other words, almost half of home-buyers in the market place skipped this crucial first step.
Buyers who are pre-approved for their loan up front are without question, a leg up on negotiation versus buyers who skipped this step. It's often times a significant reason that a seller chooses an offer over another. It can't be repeated enough, talk to a mortgage professional from the beginning to get your pre-approval in hand, so you have a fighting chance when offering to purchase a home.
Submit Your Best Offer
In a very competitive real estate market, it's very common for sellers to choose a day and time to review all submitted offers on a home at one time. In this scenario, you may not get a second bite at the apple to negotiate a better counter offer with the seller. An article from the National Association of Realtors® (NAR) explains:
“Not only are properties selling quickly, but they are also getting more offers. On average, REALTORS® reported nearly three offers per sold property in July 2020.”
Be certain when submitting your purchase offer, it's the best offer you can make and the best one the seller receives. Listen to the advice of your real estate agent, as they have a pulse on the market and valuable experience day in and day out negotiating contracts.
“Properties typically remained on the market for 22 days in July, seasonally down from 24 days in June and from 29 days in July 2019. Sixty-eight percent of homes sold in July 2020 were on the market for less than a month.”
NAR also adds,
“Total existing-home sales…jumped 24.7% from June to a seasonally adjusted annual rate of 5.86 million in July. The previous record monthly increase in sales was 20.7% in June of this year. Sales as a whole rose year-over-year, up 8.7% from a year ago (5.39 million in July 2019).”
As you have probably figured out by now, the real estate market is gaining steam. For two consecutive months properties have sold very quickly. For this reason, sleeping on it or thinking about it may not be options for you when it comes to your dream home. The possibility exists that there may be one or more buyers who also like the home. If you procrastinate, the home may be gone by the time you choose to move forward.
The real estate market has heated up significantly, and buyers are taking advantage of low interest rates to snatch up available properties faster than other homes become available for sale. If you are in the market to purchase a home in the next 12 months, let's connect so that you are fully informed on what's going on in our local market place so you are in the best position to compete - and most importantly, win.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. John Sabia, Coldwell Banker and Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. John Sabia, Coldwell Banker and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.