5 tips for tackling bidding wars
March 15, 2017
Real estate bidding wars can be fun – for those who love contests and competition. But they’re usually terribly stressful. As their REALTOR®, you’ll need to be organized to be successful for your clients. After all, it is about making the deal. Here are five ways to tackle your next bidding war like a pro – and get your clients the home they want.
Anticipate an upcoming bidding war
Not recognizing the likelihood of a bidding situation is the biggest mistake you can make. You won’t be prepared. Your client’s offer won’t be seriously considered. And you could end up losing them, if they don’t think you have their best interests at heart. The key to anticipating the bidding war is knowing the market. This is basic stuff for you, but we all need reminders. Bidding wars happen when the market is hot. Homes are selling quickly, and there are more buyers than sellers. Mortgage rates are low, giving home buyers the flexibility to bid higher than they have before. It’s worth talking to your professional peers and other Realtors at your brokerage about bidding wars in specific neighbourhoods. Knowing what’s happening will give you and your clients an edge at preparing your first offer.
Get your bid in early
While the old school of thought with bidding wars was to wait and see what has been offered before taking your turn, now industry insiders recommend being the first one to the table. According to a 2016 Globe and Mail article, bidding early starts a rapport with the selling agent. Not only does it create a prelim relationship with the sellers, it opens up the discussion of negotiables, and, the theory is, you compel the sellers to look after your best interests. The sellers are more likely to feel like they are a part of the process, instead of being taken for a ride.
Grant the seller’s wish list
While top dollar might be a good strategy, it’s only one of many bidding action plans. For some sellers, it’s the conditions that they want control over – especially when bids are close in dollars. So even if your clients slightly underbid or meet another offer, the conditions you create could win the sellers over. Maybe it’s the closing date. Perhaps they’re keen on taking certain appliances or fixtures. They might not want to wait to hear about financing. (It’s always a good idea to get your clients pre-approved for a mortgage.) Meet their conditions wish list, and other inclusions or exclusions.
Think outside of the bidding box
When the competition gets tough, Realtors get competitive. So, think outside of the traditional processes (as long as it’s legal, of course) for bidding on a home. New trends on bidding wars include: making the offer in person; letting the seller know about your clients (family situation, jobs, their plans for the house); clear conditions; negotiating cost of selling; closing date range with flexibility; a cash/certified-cheque deposit, escalation clauses, etc. “I have on many occasions included cover letters with my offers, telling the sellers more about my clients,” says Elizabeth St. Cyr, a broker with Royal LePage Real Estate Services, Glen Abbey branch, adding that she will do this especially if her clients are first-time home buyers expecting a baby. “Some sellers do care about who buys their home.” And she adds that a certified deposit cheque can help, too. It “shows strength and commitment from my clients.” This is a good topic of conversation to have with someone who just sold a home with multiple offers. Find out what separated the offers and why the winning bid won.
Think about your client
Even if you have some bidding wars under your belt, this will likely be your buyer’s first bidding war, or at least the first one in a long time. And the key to winning a bidding war is to have your clients on board with the process. This means communicating with them about your strategies. (Yes, you can have more than one. We just chatted about that in number 4.) You’ll need to guide them, allow them to choose their parameters and limits, open them up to strategies they might not have thought of, and let them know what you’re doing throughout the process. This is the biggest purchase of their lives, and they want to be a part of it. Even the ups and downs of a roller coaster bidding war.