Realtor - Amanda S. Davidson: How To Win A Bidding War In A Seller’s Market

How To Win A Bidding War In A Seller’s Market

How To Win A Bidding War In A Seller’s Market

Inventory in many areas is low and in Alexandria, it’s severely low. Other areas of Northern Virginia are experiencing the same conditions. Homes are receiving multiple offers within hours of coming on the market. It’s not uncommon for a home that’s updated and priced correctly to see 7+ offers in our market right now. We’re seeing inspections and appraisals waived, financing contingencies waived, escalation addendums, free rent backs, and buyers doing anything and everything they can to be the selected offer. 

Your first offer needs to be your best offer. So what can you do as a buyer to stand out?

Strategies For Buyers In A Hot Sellers Market


Financing -
at the very least you need to be pre-approved but, I recommend taking it a step further and being fully approved meaning your financials have already gone through underwriting. This means you can if you choose to do so waive your financing contingency. It’s the closest you can get to compete with cash. Sellers want security knowing the offer they select isn’t going to fall through and when they’ve got a pile to pick from they select the best of the best.

Cash - if paying cash is an option that’s highly recommended. I have had a couple of clients who could pay cash but, that wasn’t their first choice. The solution, purchase with cash knowing that they’d then take out a mortgage after settlement. Paying cash doesn’t mean you’re going to be able to negotiate – it’s about the total package. Not just one component of the offer.


How To Win During A Bidding War

Earnest Money Deposit - offer a large earnest money deposit when you are competing with other offers. Standard in our market is 1%-2%, bump it up to 5%. It tells the sellers you’re putting your money where your mouth is. Sellers know a buyer is far less likely to default on a contract when they’re looking at losing $30,000 vs. $6,000.

Be Flexible - cater to the seller’s schedule. If they want a certain closing date to accommodate it. If they need a rent back, accommodate it. Your agent gathering information from the seller’s agent about what their desires are will go a long way. When you’re up against multiple offers you just don’t have the luxury of calling your own shots and if you go that route you’re wasting your time making an offer. I know that sounds harsh but, it’s the truth when you’re competing with other buyers. 


Strategies For Buyers In A Sellers Market

Consider A Void Only Home Inspection -
there are a lot of buyers who are waiving home inspections all together and if you’re comfortable with doing that, by all means, go for it. It will without a doubt make your offer stand out and be stronger but, know there is a risk in doing it. It’s not something I recommend. Instead, you could opt to offer a void only home inspection which gives you the opportunity to have an inspection but, tells the sellers you are agreeing not to ask for any repairs. If the inspection reveals something that causes you to want to withdraw you can as long as you’re within the inspection contingency deadline. If you opt to have a void the only inspection make the deadline as short as you possibly can. 

Appraisal - this is another contingency you can opt to void but, only if you have enough cash to make up the difference in the event of a low appraisal. If you have a certain amount of cash you could keep the appraisal contingency as part of your offer but, include verbiage that you’ll contribute up to X amount in the event of a low appraisal.


How To Make Your Offer Appealing To Sellers

Termite Inspection - unless you’re using VA financing pay for the termite inspection. In our area, it’s $35. Yes, it’s a very minor detail however, the smallest of details matter when you’re buying in a hot seller’s market.

Home Warranty - don’t ask the seller to pay for one. If they’re already offering one that’s great but when sellers are in the driver’s seat most aren’t. Although more expensive than a termite inspection at an average of $500 it’s not much on a purchase this large. Looking at the big picture it’s a minor detail when it could make or break you getting the house you love. 

This is a general list of what you can do to stand out to sellers. There’s no one size fits all and what you do or don’t need to do varies by market. This is where working with the right agent comes in. You need experience representing your best interests and someone who will provide you with all the information so that you can make a decision you’re comfortable with. 

 

 

 

Amanda Davidson Real Estate Group

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AMANDA DAVIDSON  
l ASSOCIATE BROKER l  
l AMANDA DAVIDSON REAL ESTATE GROUP BROKERED BY eXp REALTY l

C  703.431.3755   |   O  703.988.3151  |   W  www.amandadavidson.com

A  20130 Lakeview Center Plaza #400 Ashburn, Va 20147




Comment balloon 27 commentsAmanda S. Davidson • March 03 2019 01:56PM

Comments

Your termite inspection are cheap, Amanda. Ours run about $100. And in NC, it's the due diligence fee the buyer offers that's more important than the earnest money. Great post!

Posted by Nina Hollander, Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor (Coldwell Banker Residential Brokerage ) 6 months ago

Hi Amanda S. Davidson, if the buyers really want the house, they have the tools available to them so their offers stand out. These are all great tips when making an offer on a house.

Posted by Beth Atalay, Cam Realty of Clermont FL (Cam Realty and Property Management) 6 months ago

Good afternoon Amanda. In New Jersey where I am licensed a deposit is typically 10%. Most folks put up $500 or $1000 until the contract is ratified and then the balance of the 10%. I advised my buyer clients to put the full 10% up fron with the offer. If it prevails great, if not it comes back anyway.

Posted by Sheila Anderson, The Real Estate Whisperer Who Listens 732-715-1133 (Referral Group Incorporated) 6 months ago

Amanda loved your post, interestingly our market has shifted about six or eight months ago so this is not a big concern anymore for us. Endre

Posted by Endre Barath, Jr., Realtor - Los Angeles Home Sales 310.486.1002 (Berkshire Hathaway HomeServices) 6 months ago

Yes Amanda, many home buyers are waving contingencies like home inspections, especially investors. Buyers need to read your tips to be on top of the bidding wars!

Posted by Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400, Long Island Home and Condo Specialists (The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803) 6 months ago

These are great tips for any buyers who find themselves in a multiple bid situation.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) 6 months ago

Hello Amanda,  Another great blog that people should know about.  Can I reblog this sometime in April?

 

Posted by Will Hamm, "Where There's a Will, There's a Way!" (Hamm Homes) 6 months ago

Nina Hollander I love hearing how areas vary, it fascinates me!

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 6 months ago

Endre Barath, Jr. I have to say I hope we follow. It has been a feeding frenzy here and very hard on buyers. 

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 6 months ago

Will Hamm of course, feel free to share it. Thank you!!

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 6 months ago

This is excellent advice to share with prospective home buyers.

Posted by Roy Kelley (Realty Group Referrals) 5 months ago

Good list with great ideas. Anything that makes your offer more attractive is a good idea today.

Posted by Nick Vandekar, 610-203-4543, Tredyffrin Easttown Realtor, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) 5 months ago

Good afternoon Amanda - this is a great discussion of what it takes.  It is really understanding what the seller needs and presenting the best offer.

Posted by Grant Schneider, Your Coach Helping You Create Successful Outcomes (Performance Development Strategies) 5 months ago

Nick Vandekar, 610-203-4543 it's been pretty crazy this year, hard on buyers but, sellers love it. 

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 5 months ago

Grant Schneider it sure is, when it's a seller's market that's the only way for a buyer to go. Thank you for stopping by. 

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 5 months ago

Amanda S. Davidson - You have provided excellent advice. I especially like your recommendations for Financing. Prospective buyers wanting to win the bidding war needs to take your advice and work closely with you to get their new home quickly!

Best wishes to you!

Posted by Patricia Feager, MBA, CRS, GRI,MRP, Selling Homes Changing Lives (DFW FINE PROPERTIES) 5 months ago

Patricia Feager, MBA, CRS, GRI,MRP thank you! I hope you have a great day!

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 5 months ago

Hi Amanda S. Davidson - this is just another reason why buyers need to seek you out because you have your fingers on the pulse of your market and know how to make your client a contender. 

Posted by Sheri Sperry - MCNE®, (928) 274-7355 ~ YOUR Solutions REALTOR® (Coldwell Banker Residential Brokerage) 5 months ago

Amanda, great tips for those in multiple offer situations and want to make their offer stand out to the sellers.  In my area, termite inspections are $75. I've seen buyers put down $100 for earnest money deposit.I agree that there’s no one size fits all and what you do or don’t need to do varies by market. 

Posted by Rebecca Gaujot, Realtor®, Lewisburg WV, the go to agent for all real estate (Vision Quest Realty) 5 months ago

Hey there, Amanda! Love this post and you certainly do know how to win in a bidding war! Your comment about payment method is SO true - it's not just the one component that seals the deal for our buyers.

Here, we see agents focusing on a high Due Diligence fee and price - it's often not either of those that matter to the sellers. Of course, every seller wants to make more money but, if the house doesn't appraise and the buyers can't bring additional cash to Closing, the transaction to that point has been an exercise in futility!

There are many more components to the Offer that matter MORE to sellers and it's our job, as their buyers' agents, to find that trigger point. Excellent points, my friend!

Posted by Debe Maxwell, CRS, Charlotte Homes for Sale - Charlotte Neighborhoods (www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310) 5 months ago

Sheri Sperry - MCNE® thank you! I know you get it when I say it really depends on the market. Different conditions lead to different strategies and I feel it's always important to convey that when I write.

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 5 months ago

Rebecca Gaujot, Realtor® my eyebrows went up when I read $100 earnest money deposit. I'm sure your sellers weren't thrilled. The varying markets make such a difference in what works and what doesn't. I love hearing or reading about other markets. 

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 5 months ago

Hi Debe Maxwell, CRS! I hope you're having a great week! The more we know the better we can guide our buyers. I've never understood agents who submit a "blind" offer. As always it goes back to communication and I know you are a master!

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 5 months ago

Hi Amanda, this is a great list. My son just accepted an offer on his house...the winning bid changed from financing to cash and tightened up the closing date by 15 days.  Cash doesn't always matter most, but in this case, it took uncertainty off the table and allowed for an earlier close. The other offer was also cash, but they had some unusual contingencies and a longer closing period. 

Posted by Debb Janes EcoBroker and Bernie Stea JD, REALTORS® in Clark County, WA (ViewHomes of Clark County - Nature As Neighbors) 5 months ago

Debb Janes EcoBroker and Bernie Stea JD the unusual contingencies always leave me scratching my head, especially in a multiple offer situation. It sounds like your son is going to have a quick and smooth transaction. Wishing him all the best. 

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 5 months ago

Hi Amanda S. Davidson the clean deal wins.... terms are as important as price and sometimes more important.... keep it clean.

Posted by Barbara Todaro, Marketing Agent for The Todaro Team (RE/MAX Executive Realty ) 5 months ago

Barbara Todaro perfectly stated! 

Posted by Amanda S. Davidson, Alexandria Virginia Homes For Sale (Amanda Davidson Real Estate Group Brokered By eXp Realty) 5 months ago

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