Four Strategies For Winning A Property Bidding War
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With increasing demand, a booming stock market, and dropping mortgage rates, securing a property in a bidding war has become quite the challenge. I recently found myself in such a battle over a newly renovated four-bedroom home in San Francisco’s Central Sunset/Parkside district, known for its stunning ocean views. Although I placed a bid 27% above the asking price, I was outbid by a retired couple who offered 50% above asking with a 10-day close. This loss taught me some valuable lessons about strategy and financial prudence in property bidding wars.
Here’s how to stand out in a bidding war without breaking the bank:
1) Consider not using a realtor.
Bypassing a buying agent can save you the 2.5% commission typically given to the buyer’s agent. Instead, approach the selling agent directly to represent you. This could not only give you a pricing edge but also ensure you’re directly involved in the negotiations without a middleman. However, be cautious of potential conflicts of interest and make sure you’re informed about every aspect of the deal.
2) Leverage future business as a bargaining chip.
If you have other properties or plan to have future dealings in real estate, make this known to the selling agent. Promise of future business can significantly sway negotiations in your favor, particularly if you hint at giving them the listing for another property you own.
3) Submit a no-financing contingency offer.
Offers without financing contingencies are as appealing as cash offers to sellers because they eliminate the risk of buyer financing falling through. Ensure your finances are in order so you can confidently make such an offer.
4) Target listings by out-of-town agents.
Out-of-town agents might not have the same local network or market confidence, which can work to your advantage. These listings might be less competitive, providing a better opportunity for negotiation.
Always Stay Disciplined When Buying Property
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It’s essential to stay disciplined and detached during property negotiations. Emotional bidding can lead to overpaying and long-term financial regrets. Know your limits and be prepared to walk away if the price exceeds them. Remember, the right property will come along at the right price.
In a competitive market, losing out on a property can be disappointing, but it’s crucial to view each bid as part of a broader investment strategy. Don’t rush into a deal that doesn’t make financial sense just because of bidding pressure.
