A Great Realtor(R) Is a Great Weapon in a Bidding War, Part 2
The nation is experiencing record low inventory of homes, especially market rate listings; the resulting competition for these homes is reaching fever pitch. Buyers, feeling pressure, try brave (and sometimes dangerous) ways to outbid their competitors: pre-emptive bids, zero contingency bids, and the plain old over-bid. It can all get a bit crazy
But take a breath. Help is out there. When you’re bidding competitively on a home, your best weapon is a well experienced Realtor® who can guide, inform, and keep you sane.
In Part One of this blog series, we looked closely at two markets: Portland, OR and Southern California. This time, we shift focus to Austin, TX and Boston, MA, to show you that buying a home has become a competitive process all across the country: but experienced agents know how to fight these battles, and win.
News from Austin, TX:
Austin’s inventory in May of 2012 is down over 14% from last year at this time. Unsurprisingly, the median asking price is up 5% from last year as well. Supply down, demand up, and you have the makings of a bidding war. What do seasoned Realtors® in Texas tell their buyer clients when bidding to win?
Brenda Reiss, Zip Realtor® in Austin, Texas, says that agents have access to key information their buyers need to compete. For instance,
1) Realtors® have ready access to the most current, detailed comparables and standing inventory in the market area and the number of days the home has been on the market. She can also pull a current tax appraisal.
2) Agents can find the information on sellers, which she calls a “Fishing Expedition by the Buyer’s Agent,” such as why the seller is selling, whether the seller is motivated, and how much the seller needs to make on the sale. Brenda uses this “fishing” technique to assess interest in the home, to estimate the number of potential offers.
3) Experienced agents know how to handle all kinds of bids, and know that sometimes the highest bid isn’t the best one, for the seller. She also points out that depending on the type of sale (market rate, REO, or short sale), the offer submission process will vary.
4) Intuition. “This kind of 6th sense comes from experience; it’s one of the most important assets a buyer’s agent has, and we can use it in helping our clients formulate an offer,” says Brenda. “We base this intuition on the current market, the price of the house, it location…the law of attraction applies to houses even if they’ve been on the market a long time. It just takes one bid on such a house before the other bids start pouring in, especially these days in our hot Austin market.
5) Agents know when it’s best to walk away. With an emotional distance the buyer may have a hard time achieving, good Realtors ® know when to say when.
News from Boston, MA
Boston’s home inventory is down over 13% from last May, and here too, median asking prices have crept up 3% from last year. Well priced homes are flying off the market, often after stiff bidding. Adam Rice, Zip Realtor in Boston, has a few tips he shares with his buyer clients in a market this competitive.
“While not every situation leads towards a bidding war, there are certainly properties in my area that are attracting multiple offers. The ‘right’ home in a desirable location often looks ‘right’ to more than one buyer. To have the best chance to make a winning bid there are things that both my clients and I can do.
We need to be prepared to act fast...not rushed, but confidently ready to make our best move on the right property when we find it. Then it's my job to present that offer in a way that a seller can feel confident it is the best offer.
Being prepared starts with my clients having a plan in place for financing, with a pre-approval letter from a reputable lender or other document-able proof of funds, as part of an offer.
Being confident comes from understanding market value by analyzing and discussing comparable properties. Only with that knowledge can my clients feel comfortable making the strongest offer that fits their financing plan, which I recommend in a multiple-offer situation.
Beyond that, I try to find every possible advantage my buyer client may have, and present that to the selling side. (If my buyer has flexibility in a closing date I want to let that be known. If my buyer can provide a financing commitment sooner than later I suggest we offer that.)
I always contact the seller's agent to discuss my client's offer, presenting it and my clients in the best possible light, and if necessary answer any questions that come up. In certain situations I've asked if my clients and I can present the offer face to face with the sellers and their agent. Sometimes the chance to see a buyer as a person rather than just a name on a contract makes the difference."
- A Great Realtor® is a Great Weapon in a Bidding War, Part 1
- The Anatomy of a Bidding War: How it Works and How to Win
- Search for Homes in Boston, MA
- Search for homes in Austin, TX
Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert.