The real estate market is doing some weird and wonderful things in light of the pandemic. Many areas are experiencing an aggressive sellers' market, unlike any they've experienced before. This occurrence puts many sellers in the prime position of navigating a bidding war.
If you're selling your home, you may be wondering how a bidding war can benefit you. Here's what you need to know about bidding wars and how to navigate them for the best results.
A bidding war is when multiple competing offers come in at the same time. In many cases, the offers are near or above the listing price. This puts sellers in a prime position to increase their selling price and improve their financial situation when selling a home— especially when the house is for sale by owner.
While a bidding war is inherently a good thing, it can be a stressful situation. Many sellers feel compelled to accept the highest bid when it's not always the right choice. Others rush into making a decision out of fear that potential buyers will pull out.
The key to successfully navigating a bidding war is to take your time, think logically, and look at all the variables.
To initiate a bidding war, you need to start by setting the right price. In a seller's market, this should be on par with similar homes or a bit less. It's vital not to undercut the price too much, as you risk selling yourself short and implying that something is wrong with your home.
Take some time to research homes in your area. Determine what they're listed for and how much they sell for. This exercise will give you a solid idea of how to price your home.
Channeling your inner marketer is another vital step in initiating a bidding war and procuring high-value offers. Use high-quality videos and imagery to do a virtual walk-through before it goes on the market. Start showing your home a week or two before it officially goes up for sale to build hype.
Social media is a powerful way to market your home. Both real estate agents and people handling their own sales can reach hundreds or even thousands of potential buyers using well-planned social media.
Create a sense of urgency by promoting an offer review date with your listing. By telling potential buyers that you have a deadline and are pushing to sell, they'll be more likely to make a generous and timely offer.
Setting a review date doesn't mean you have to accept offers that come in by that deadline— a review date isn't legally binding.
When you start to get offers, it's vital to look beyond the highest number. There are a lot of moving parts in selling a home, and the top monetary offer isn't always the best. It's also important to consider the contingencies— like waiting on the buyer to sell their home first— and the conditions.
When looking at offers, you also need to consider whether the buyer is pitching beyond their means. Look for a buyer who has mortgage pre-approval, not just a pre-qualification. If your asking price is significantly higher than the appraisal, then securing a loan might be challenging for the buyer.
Finally, if you receive any cash offers, you should consider them. Cash offers are rare and come with the potential to save time while generating more money, even at a lower offer.
Knowing how to navigate a bidding war is important when selling your home. Being aware of these tactics will also help you when purchasing a new home during a sellers' market.