Handling a Bidding War as a Buyer
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Sometimes the market is so hot there are multiple buyers competing for the same property in a “bidding war.” If a property owner or his agent figures there will be multiple offers and buyers willing to go beyond the list price, they set up what is essentially an auction, although the highest bidder doesn’t always get the house.
The seller’s terms usually are that offers will be accepted until a specific time and date. The seller then opens the “bids” and decides which one to accept.
Ready, Set, Enjoy the Adrenaline Rush
There are many losers in a bidding war and only two winners — the seller, who makes a pile of money, and the buyer who wanted the home badly enough to bet whatever it took to get it. Often that means dropping contingencies, including the inspection.
Remember that advice about keeping emotions at bay? Good luck. It is not uncommon for buyers in a bidding war to include personal appeals to the sellers with a letter about themselves or an essay about why they love the house — an unapologetic, emotional appeal to make their bid stand out from the others.
Buyer's Tip: Bidding wars are not for the faint of heart. They are for risk-taking, move-up buyers who have real estate experience, a shrewd agent, and/or a pile of money to spend.
Real Life Example
Who: A Seattle couple out for a dog walk
The situation: They suddenly fell in love with a house in a hot neighborhood. Bids were being accepted until 5 p.m. Friday. They felt certain they could handle the financing and sell their own house.
The offer: They went home and wrote an offer for $5,000 over the asking price with no contingencies, which means they asked for no concessions from the sellers. They gave themselves no way to back out of the contract. They would take the house “as is,” becoming responsible for all repairs.
The outcome: They won the bidding war even though theirs was not the highest offer. All the higher bids had contingencies attached.
Next article: Closing on a House for the Buyer
Previous article: How to Back Down After Signing
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