Responding to a Bidding War

by Meg Burke 09/29/2019

You and your agent search for weeks to find the perfect home and suddenly, there it is on the market. It’s in the highly sought-after neighborhood of your dreams and, amazingly, the asking price is in your sweet spot. You and your agent follow tried and true negotiation tactics only to learn that the seller has multiple offers to consider. Entering a bidding war to get your dream home creates all kinds of complexities. Having the right professional to help you navigate the process may mean the difference in winning the war or not.

Know your agent’s limitations

If your agent has never participated in a bidding war, ask him to seek advice from a knowledgeable colleague or his lead broker. Entering negotiations blind will not help you, but you and your agent can learn from the process with some expert guidance.

Know your financial limitations

The frenzy of a bidding war and your competitive nature to win may push you to increase your bid outside the range that’s comfortable for your budget. The thrill of winning is soon dashed by buyer’s remorse when paying your mortgage each month puts limitations on your household that you didn’t intend.

Learn how to stand out

Not all bidding results center on money. Sometimes the person that wins the bid isn’t the one offering the most money. Home selling is as emotional for most sellers as is home buying. Owners selling the home they lived in and raised a family in often want to know that the home’s buyers will do the same. So, if some of the bidders are investors, but you’re buying to make a home for your family, let the seller know. Write a personal letter to the seller about what owning their home, living in their neighborhood, sending your children to their local schools, would mean to you and your family. Let them know you’ll cherish the home the way they did.

Add an escalation clause

If you suspect there will be a bidding war on the home you’ve selected, include an escalation clause in your offer. Such clauses are addenda that automatically increase your bid by specified amounts up to a set maximum that you’re willing to pay. So, if you make an offer and someone outbids you, your agent can immediately increase your bid by the predetermined amount up until someone else outbids your maximum. This sort of clause always ensures you have the top proposal to that point.

Be open to negotiation on contingencies

When you’re in a bidding war, sometimes the least complicated bid wins the day. That is, proposals with fewer requirements such as specific closing timing, move-in dates, minor repairs, home warranties, etc., and who pays more in the closing costs can tip the scales in your favor. On item not to dispense with, however, is home the inspection. 

If you think a property you want might end up in a bidding war, seek out an agent with plenty of experience to help you navigate the complexities involved.

About the Author
Author

Meg Burke

 Meg & Loudoun County: Back in 1993, we moved here from Pennsylvania, thinking we'd stay for a year or two -- now it's been well over twenty five! In the past I was a broadcast advertising rep (Philly market) and at-home mom, until in 2000, when I jumped into the real estate business. Even with all the ups & downs, I've loved this business ever since! I've raised two wonderful children in Loudoun County Public Schools (www.lcps.org); one is a recent VA Tech graduate, and the other graduated from UVA. I've come to know Northern Virginia well and truly enjoy calling Loudoun County "home." Northern Virginia, and Loudoun County in particular, expanded dramatically in the mid 2000's; but along with the rest of our nation, experienced the challenging real estate market contraction of the "great recession." Luckily, our area has been back in a solid growth trend in recent years, so we are seeing fewer distressed properties and both resale and new construction homes are selling well. Let me assure you: Even as it grows, Loudoun County continues to be a wonderful place to live! Where else can you live less than an hour from concerts at the Kennedy Center or Capitol Center, Smithsonian Museums, the AND the Appalachian Trail? Loudoun County Notes: One of Loudoun's strengths is that we have a broad-based economy. We are not just a federal government dependant suburb. For example, did you know that over 70% of the world's Internet traffic flows through Loudoun County daily? (https://biz.loudoun.gov/) Ask me about the 45 mile-long Washington & Old Dominion Trail, which is great for jogging, walking the dogs or even an all-day bike trek. https://www.novaparks.com/parks/washington-and-old-dominion-railroad-regional-park Do you enjoy wines? Loudoun County is home to award-winning vineyards, with a reputation that is growing every year. www.visitloudoun.org/things-to-do/wine-country/ Serious shopper? Then you must visit the Leesburg Corner Premium Outlets! The antique shops in Leesburg, Purcellville & Middleburg are fantastic. You won't want to miss my personal favorite: the Waterford Fair in October -- an outdoor juried crafts fair in historic Waterford. www.waterfordfoundation.org History buff? Gardener? Perhaps you would prefer to stroll the grounds of Oatlands Plantation, a National Trust for Historic Preservation property; tour Morven Park or Dodana Manor in Leesburg. The farm and garden tours each year are always fascinating and enjoyable. Country Fairs are still going strong in Loudoun County. The Leesburg Flower & Garden Festival in Apri (another one of my personal favorites); the Bluemont Fair in September; Octoberfest in Lovettsville;... These are just a few of the events to enjoy throughout the year. Loudoun County and Leesburg, the county seat, are frequently included in "best of" lists (http:\/\/money.cnn.com\/magazines\/moneymag\/best-places\/2013\/snapshots\/PL5144984.html ) (https://smartasset.com/mortgage/happiest-places-in-america) There is so much to enjoy in Loudoun. Come see for yourself. I'd be happy to show you around! There are so many reasons to enjoy living here, but remember, the market is still quite fluid and challenging. Let me help you navigate your way through the interesting and sometimes overwhelming resales, short sales, foreclosures and new construction. I take my profession seriously; and although I do have my bachelor's degree (U. Penn, back in 1981), I am constantly upgrading my professional education in order to provide you with the most informed and up-to-date real estate support. Please remember: whether you or your friends are interested in buying or selling, MOVE WITH MEG! Let me help you make this a positive experience for you -- both for your family and your finances!