Bidding wars today can be brutal.
In Colorado, buying agents must navigate limited inventory to find a home that fits the buyer’s needs. In the Denver Metro Area, homes spend a median of only four days on the market in April. According to the latest REcolorado Market Watch reports, the housing market remains competitive across the state. Fueled by strong demand and low inventory, the Average Closed Price for homes is at an all-time high. In the following article, dotloop looks at bidding wars, what’s causing them, and how to win.
What’s Causing Today’s Real Estate Bidding Wars?
If you’re like most real estate agents coast to coast, you’re experiencing a fierce seller’s market that has set off intense bidding wars. These bidding wars are fueled by multiple factors, but the primary reasons are tight inventory, low interest rates, migration, and an increase in multigenerational households.
The pandemic has led to a restructuring of U.S. households, with families downsizing and upsizing, moving across the country, and more millennials living with their parents than at any time since World War II.
Fortunately, there are steps both buyers and listing agents can take to make their offers stand out and win in the tough vetting that is defining today’s hot seller’s market.
Download this free guide from dotloop to discover 10 steps buying agents can follow to win bids, and 5 things listing agents can do to get deals done.
Below is a sneak peek of some of the tips found in the downloadable guide.
3 of the 5 Steps to Win a Bidding War as a Buying Agent
Ask Targeted Questions.
To win the bid on a hot property, buying agents must ask the right questions. Price isn’t always the winning factor in a bidding war but having the right information at the right time almost always turns the key.
In this market, your offer is probably not the only one up for consideration, so try and make a connection with the listing agent.
Agents who ask the listing agent questions discover new ways in which to craft an attractive offer. The sellers may need time or an option to rent back the property for a few months while their new construction home is completed. Or maybe they’re looking more for a firm deal than a higher price.
Ask the listing agent targeted questions such as:
- What are the sellers looking for in terms of a closing date?
- Is there negotiation room for repairs?
- How long has the seller lived in the house?
- How many offers have been received to date?
Sign the Letter. Seal the Deal.
Buyers can also create a bond with the seller through a well-crafted letter explaining their motivations for wanting the house. If the discovery questions to the listing agent reveal, for instance, that the seller has lived in the house for many years and was active in the local community, a well-written letter from the buyer can tap into that emotional connection and get their attention.
Ken Laroza, Broker Relations, Director, for Zillow’s Canadian market, personally won a negotiation for his then-girlfriend, current-wife when she bid at a significantly lower price point than other bidders on a home in Toronto. He explained in the letter that it’s her first home and she loved the neighborhood and wanted to start a family there. The property had been on the market for several months and the owner had turned down several offers from builders and renovators, all bidding at a similar price point.
“I argued that she wasn’t interested in renovating and selling the property but wanted to become part of the community and set down roots. They liked the story and, ultimately, she won the property,” says Laroza.
Offer Buyer’s Highest Bid Upfront.
When prepping a client for a purchase offer, Laroza advises buying agents to always ask their client, “‘At what price are you willing to lose it for?’ If they would be willing to lose a $850,000 listing at $890,000, then offer $892,000. In a hot bidding war, there’s only one chance.”
While some buyers will say, “Let’s present this offer and then see what they say,” all too often the seller has already awarded the bid to a higher offer.
That said, the process has to start slowly with some buyers before they can ramp up to a winning bid. “I see lots of agents say, ‘Why am I going to waste my time?’ But you’re not. You’re going through the process of having your client submit an offer. You’re prepping them for the ultimate purchase,” says Laroza.