With experts predicting that housing inventory won’t return to pre-pandemic levels until 2024, competition among homebuyers—and ultimately bidding wars—is here to stay.
It can be challenging to craft a winning offer in today’s ultra-competitive market, which is why an agent’s ability to successfully guide their buyer through a bidding war is key for helping them come out on top.
With that in mind, the strategies below can help give your client the edge they need, recommended by Triplemint agents Tyler Whitman, Daniel Blatman, Elisa Seeger, and Hila Peled.
First, Get on the Same Page
A seller is always going to want to make as much as possible from the sale of their home, so it’s important that your client submit a sensible offer. Start by having a conversation about the highest price they are willing to pay for the home. “Regardless of the seller agent’s pricing strategy and the number of offers there are, it’s important to understand what their walkaway point is,” says Triplemint agent Daniel Blatman.
He recommends framing it like this: Based on neighborhood comps as well as any potential work you would need to do to feel excited about living there, what is this home worth to you?
Once you’ve established that number, you and your client can determine whether to offer that price right out of the gate or to start lower and raise it as necessary.
Contingencies or No Contingencies?
When it comes to contingencies, fewer are better. “Contract terms can make or break a deal,” says Triplemint agent Hila Peled. “If your client wants to be competitive, they can submit a non-contingent offer.” Of course, this is all assuming you’ve educated your client on the risks involved with waiving all contingencies.
Still, not all contingencies are created equal, and some can actually work in your client’s favor in a hot market. An example of one such contingency is an escalation clause, which tells the seller that your client will raise their offer by a set amount if the seller receives a higher bidder. While an escalation clause is not guaranteed to be accepted by the seller, if your client wants to go this route, make sure they aren’t setting the cap at a number that is higher than they can afford—aka their “walkaway point”—especially if they are working with a lender.
Pre-approval Is Essential
Speaking of lenders: In all cases, but especially in today’s fiercely competitive market, buyers who have already been approved for a loan are automatically at an advantage. With multiple offers on the table, a seller likely won’t even entertain a buyer who hasn’t secured pre-approval. Triplemint agent Elisa Seeger notes, “Reiterate to your client that you are working in their best interest and want to help them avoid the likely situation of falling in love with and missing out on a home.”
Pro tip: Have mortgage banker recommendations at the ready to aid in your client’s process of getting pre-approved.
“Sweeten” the Deal
When sellers are emotionally invested in their property (as they often are), a buyer expressing a similar sentiment can go a long way towards winning them over. “Play to the emotional side of the seller,” says Triplemint agent and Million Dollar Listing New York star Tyler Whitman. “Have your client write the seller a heartfelt letter letting them know what their home meant to them, the feeling they got when they walked in, etc.”
Adds Daniel Blatman, “Even if the client is going to gut-renovate the home, you still want the seller to imagine that they are going to love it and care for it just as much as they did.”
In Conclusion
With bidding wars showing no signs of slowing down, the above tips will not only increase the chances of your client landing their dream home, but will also make them feel prepared, informed, and confident throughout the entire process.
