You and your agent search for weeks to find the perfect home and suddenly, there it is on the market. It’s in the highly sought-after neighborhood of your dreams and, amazingly, the asking price is in your sweet spot. You and your agent follow tried and true negotiation tactics only to learn that the seller has multiple offers to consider. Entering a bidding war to get your dream home creates all kinds of complexities. Having the right professional to help you navigate the process may mean the difference in winning the war or not.
Know your agent’s limitations
If your agent has never participated in a bidding war, ask him to seek advice from a knowledgeable colleague or his lead broker. Entering negotiations blind will not help you, but you and your agent can learn from the process with some expert guidance.
Know your financial limitations
The frenzy of a bidding war and your competitive nature to win may push you to increase your bid outside the range that’s comfortable for your budget. The thrill of winning is soon dashed by buyer’s remorse when paying your mortgage each month puts limitations on your household that you didn’t intend.
Learn how to stand out
Not all bidding results center on money. Sometimes the person that wins the bid isn’t the one offering the most money. Home selling is as emotional for most sellers as is home buying. Owners selling the home they lived in and raised a family in often want to know that the home’s buyers will do the same. So, if some of the bidders are investors, but you’re buying to make a home for your family, let the seller know. Write a personal letter to the seller about what owning their home, living in their neighborhood, sending your children to their local schools, would mean to you and your family. Let them know you’ll cherish the home the way they did.
Add an escalation clause
If you suspect there will be a bidding war on the home you’ve selected, include an escalation clause in your offer. Such clauses are addenda that automatically increase your bid by specified amounts up to a set maximum that you’re willing to pay. So, if you make an offer and someone outbids you, your agent can immediately increase your bid by the predetermined amount up until someone else outbids your maximum. This sort of clause always ensures you have the top proposal to that point.
Be open to negotiation on contingencies
When you’re in a bidding war, sometimes the least complicated bid wins the day. That is, proposals with fewer requirements such as specific closing timing, move-in dates, minor repairs, home warranties, etc., and who pays more in the closing costs can tip the scales in your favor. On item not to dispense with, however, is home the inspection.
If you think a property you want might end up in a bidding war, seek out an agent with plenty of experience to help you navigate the complexities involved.
Terese Ferrara is a long-time resident of the Bay Area and has been a partner with the Goss | Ferrara Real Estate Team. She and her husband raised their two daughters in San Jose, where she successfully continues to build her real estate career.
After earning a bachelor’s degree from San Jose State University, she went on to teach in the San Jose Unified School District for 9 years. Transitioning to real estate was a logical choice, utilizing her patient demeanor to educate all levels of buyers and sellers. Knowledge and experience demonstrate her vested interest in delivering the highest level of care and professionalism to every client. She consistently strives to exceed her client’s expectations throughout the entire real estate transaction and remains a trusted advisor long after each close.
As a board member on KW Bay Area Estates’ Associate Leadership Council (ALC), she aids in support of culture and professional development strategies for over 180 associates. Terese is also a Director for the Santa Clara County Association of Realtors Foundation, which supports community service initiatives in Silicon Valley.
Terese is the consummate real estate professional dedicated to providing unparalleled service to her clients through ongoing training and education, keeping her on top of the dynamic market and latest real estate trends. Her high-touch approach coupled with honesty and integrity support her commitment to her client’s real estate needs.
