How to Win the Real Estate Bidding Wars

How to Win the Real Estate Bidding Wars
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Knowing a few tricks of the trade can make the difference between walking away disappointed and purchasing the home of your dreams at a fair price.
By Marcie Geffner

In many of today’s strong real estate markets, home buyers can expect to face multiple offer situations. Multiple offers are a classic example of economic realities because they appear when the supply of homes for sale is limited and the demand for good-condition homes is strong. Buyers hate multiple offers because they push up home prices and create an extremely stressful home-buying experience. Knowing a few tricks of the trade can make the difference between walking away disappointed and purchasing the home of your dreams at a fair price.

How can I make my offer more attractive to the sellers?

Offer the highest price you can. Get preapproved, not just prequalified, for your mortgage and attach a copy of the preapproval letter to your offer. Make as large a downpayment as you can and provide documentation showing the source of your downpayment (e.g., a bank statement). If your current home is in escrow, provide information about that transaction. Avoid unnecessary contingencies. (Waiving your inspection or financing contingency can make your offer attractive, but it’s foolish.)

Tip: If the equity in your current home is the source of your downpayment, make your offer contingent on obtaining financing, but not on the sale of your home. If your home doesn’t sell, you won’t have the downpayment and you’ll get out under the financing contingency, suggests Bob Stallings, broker/owner of RE/MAX Real Estate Specialists in Long Beach, California. Finally, include a personal note about why you want to buy the home. All else being equal, some sellers are influenced by these communiqués.

My offer didn’t prevail in a multiple offer situation. Can I find out why?

Neither the sellers nor their agent is obligated to reveal any information about the decision. As a courtesy, agents frequently will point out shortcomings of a rejected offer, but without disclosing details of the accepted offer. “Until a transaction is closed, it’s crucial that everything remain unknown in case that property has to come back on the market,” explains Carole Geronsin, a Realtor-associate with Prudential California Realty in Anaheim Hills, California. “I sold a property where [the buyer was making] a relocation transfer. A week and a half later, the company decided they were not going to transfer that executive. What would have happened if I had gone around saying, ‘It sold for this amount?’ You can’t do that.”

Can I submit an offer on a home in escrow?

Yes, but agents say you would be wiser to move on to another home, particularly if there are formal back-up offers. Even if your offer tops the accepted agreement, the sellers would have great difficulty canceling the escrow.