Multiple Offers/Bidding Wars
Buyers fret at the thought – and many will say, “I’m not getting in a bidding war!”
Here are my thoughts on bidding wars:
1. It means you have found a decent property with a good price on it – which isn’t easy these days! You should at least find some comfort in your advanced hunting skills, and ability to identify a quality buy – congratulations!
2. It also means it will be likely that the other buyers and agents will panic, and half of them will hit the eject button – so hang in there, the competition is likely to eliminate themselves.
3. There are no rules or standard procedures, so get the listing agent to commit to a specific process – how will they handle multiple offers? Will they counter each one with a specific price, or will they ask each bidder to submit their highest-and-best offer?
On a hot, new listing, it is better for the seller to ask for highest-and-best offers – because you don’t know how high a buyer might bid. If faced with a H&B request, only submit the price you are comfortable with, and tighten up all the other terms so at least you have improved your chances the best you can – and hope for the best.
If they counter each bidder with a specific price, it is imperative that you ask the listing agent how they will pick a winner if everyone signs their counter. Typically the answer is a vague and lame, “well, we’ll just look at them all, and the seller will make a decision”, when really it gives the listing agent a chance to play God and select their favorite agent or some other slimy way of choosing.
They may have countered a specific, but different, price to each bidder, but that is rare – agents aren’t that smart. But if they say that they did, then you may want to consider offering more than the seller gave you, just in case.
If it is a tired, old listing, and/or you think the listing agent is bluffing and you don’t care enough about buying this one, then don’t respond. If there is any chance of coming back later, you don’t want to tip your hand, or sully your reputation now. I think it is rare that agents bluff, because they aren’t good at it, don’t have much experience at it, and they don’t want to blow a sale. If you are going to be suspicious, be wary of the top-notch agents, but they usually have their assistants doing all the work anyway so there’s less chance than you might think – plus typically they are in it to maximize their volume of sales, not toying around.
4. Discuss strategies ahead of time. You don’t want to be in the heat of battle and have to figure out how you are going to handle it on the run.
5. Read Paragraph 3K of the C.A.R. Residential Purchase Agreement.
6. Remember that you always have your contigency period to sort things out.
Whether you are selling or buying, you should ask questions of your agent about bidding wars, and how they handle them. They should have recent success stories and/or strategies available – because they will need them! My winning percentage is down a little due to other agent’s buyers willing to pay a lot more than they should – if you love the house, add a little extra mustard, just in case – but don’t overdo it.