Don't Make These Bidding War Mistakes

Bidding wars are the new normal for buying a home today. In desirable areas, there may be multiple offers, which might force you to up the ante in a dizzying quest to come out on top.

Yet in the heat of the moment, many buyers run the risk of becoming overzealous, making mistakes that cost them the deal—or worse, land them with a house they regret. Don’t be one of them!

Here are some common bidding war mistakes you might be particularly tempted to make in today’s crazy market,

1. Bidding every last penny you have

While offers that are thousands over asking price seems commonplace in today's market, being a buyer and bidding every last bit of your budget in order to gain the winning bid is setting yourself up for failure. In the event of an emergency or even a potentially needed home repair, if one doesn't take their true financial budget into consideration.

2. Bidding with many contingencies

You should never get involved in a bidding war beore your financing is in  place and you know exactly where your money is coming from. One of the main contingencies that overcomplicates the buying (and selling) process is for an offer with a contingency dependent on the sale of the oferror's current home. The seller will always pick the bid with the fewest uncertainces, even if that means guaranteeing less money for an mortgage offer with less contingencies, or, most ideally, a cash buyer.

3. Bidding with no contingencies

While being competitive is key any market, especially in recent times, it is also important to reman level-headed and not neglect any potentially important contingencies that can save you from a potentially huge headache. For instance, many buyers may feel pressured to potentially waive a much needed home inspection with the hopes of securing an accepted offer, however this also waives the ability to back out if any major flaws are detected. Rather than outright waiving the inspection as a negotiation point, it is recommended to bid as high as financially possible and to make concessions on length of escrow and down payment.

4. Assuming you'll get a second choice to place a bid

If you find yourself in a multiple-bid situation, it is recommended to submit your highest possible offer, as many buyers have learned to  do so in order to remain competitive in a market that is just now alleviating in terms of available inventory. Prospective buyers think they'll have more chances to raise their bid if needed, and they are often wrong about that.

5. Using the term 'best and final offer'

Even if you’ve bid as much as you can possibly afford, never tell the sellers that. They might take you at your word and cut you from the herd. There might be other contingencies you might be able to handle, like a few months of leasing the property back to the seller at a reasonable price. Sometimes sellers aren’t ready to move yet.

6. Not knowing a home's true value

Some buyers are hesitant to offer above the asking price in a bidding war thinking that the home is not worth more than that. What they are not taking into conideratin is that sellers often intentionally price their home slightly below its true value to get a bidding war ging and have more buyers drive the price higher in the heat of competition. In order to better educate one's client/(s), it is reccomended to refer to nuumbers and proven stats that look all factors involved, such as the ack of inventory, market trends, how much the price of properties have increased in certain areas over time. Taking a broader look at all these factors, while also highlighting the significance that these factors have in terms of impacting price.

Works Cited:

Lisa Johnson Mandell. “7 Bidding War Mistakes Today’s Homebuyers Are Making in Droves.” Real Estate News & Insights | Realtor.com®, Real Estate News & Insights | realtor.com®, 2 June 2022, www.realtor.com/advice/buy/bidding-war-mistakes-homebuyers-are-making-today/.

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