5 Tips to Manage a Bidding War
It's often the best-case, dream scenario for a hopeful home seller: a bidding war. When several motivated buyers make offers on a listed property, a higher-than-expected sales price can result.
But be careful what you wish for: negotiations involving multiple offers can get complicated and, if not handled properly, can result in seller regret.
"The only thing better than getting an initial offer from one seller that beats your asking price is receiving several offers from competing sellers," said Kerry Brill, president and chief executive officer of Merit Co. Real Estate in Colorado Springs, Colo., the oldest and largest independent full-service real estate agency in the Pikes Peak region. "This can trigger a bidding war."
While this clearly puts the seller in the driver's seat with more leverage, Brill says, there's also danger when bidding heats up. "Sellers often get excited by multiple offers. But it's really a time to think clearly and act with great deliberation."
Sellers and their agents must evaluate each offer and buyer candidate carefully, be prepared to counteroffer effectively and know the right time to accept.
To ensure that you get the best and highest offer possible among multiple bidders, Brill offers these tips:
1. Choose a reputable agent with experience handling a competitive bidding situation.
2. Select one of three options after receiving multiple offers and consulting with your agent:
• Accept the best offer provided.
• Make a counteroffer on one offer, ignoring the other offers for the time being or rejecting all other offers entirely as you wait for a response to your counteroffer.
• Inform all prospective buyers that there are other offers on the table and request that each of them make their best offer.
3. Be aware of limits on what your agent can legally reveal. State law may prohibit your agent from sharing with a bidder private information from other bidders (such as the exact amount a buyer needs to offer to win a bidding war) that would cause this party to change its bid. Instead, it's okay to inform a bidder that an offer has come in over the asking price and to relay information such as the expected timing for closing.
4. Don't make highest price your only determining criterion. The most ideal offer is typically one that includes the best combination of high price, the least unreasonable terms/concessions, and the most qualified buyer.
5. Give higher preference to a buyer ready to purchase mostly or entirely with cash. Cash transactions eliminate worries related to buyer financing and may speed up the closing process.
6. Be patient during the process. Be prepared to wait for more offers and responses to your counteroffers to come in to increase your chances of getting a higher-than-anticipated selling price; however, working closely with your agent, don't be afraid to put pressure on competing bidders by implementing deadlines and terms.
Thinking of selling your home? Partner with a long-established, highly regarded hometown real estate agency with proven expertise in the Colorado Springs market.
Merit Co., established in 1969, operates four offices in the Pikes Peak region. In addition to serving homebuyers and sellers, Merit owns a mortgage company and offers property management services.