Here's the scenario: You've looked at dozens of apartments all around the city, when, finally, you come across the perfect one, the one you MUST have for its excellent location, satisfying square footage, accessibility and convenience, low maintenance fees, and great price - in other words, the works.
When you put in an offer, the listing broker informs you there is another buyer...which means you've officially entered a bidding war. Now what?
Well, that is not uncommon nowadays because as you've no doubt heard, seen, and possibly experienced, Boston's real estate market is sizzling, with buyers feeling the heat as low inventory constrains options and bidding wars emerge even from the simplest of properties. In fact, bidding wars are now more than just a common practice; it's a staple.
So we've lined up the best tricks and tips for you bidders out there who are just lazily waiting to hear back from your offer; and if you're not yet in the process of warring against the world of property hunters, then keep these in mind so you can soldier on with guns a blazing:
STACK THE ODDS IN YOUR FAVOR, FINANCIALLY
Offer all cash if you can. If you can't, then try to provide a non-contingent offer. Usually when sellers see this, they'll be dumbstrucked with the idea that they could walk away the next day with a pile of cash on their bags, and easily sign over the property's deed to you.
Though cash is - and will always be king, non-contigent financial offers enable you to say to the seller that you won't be getting out of the contract; it's ensures them that you're willing to do everything and anything necessary to produce the amount needed to satisfy their asking price. These kinds of deals are somewhat common these days and won't necessarily ruin your chances of closing in on a property, and on the contrary enhances the likelihood of acceptance.
A contingent offer on the other hand (i.e. that you will be able to settle payment and or mortgage upon the sale of your previous home), will definitely move you to the bottom of the list. Remember that contingencies are a tool that exposes your risky disposition, not the other way around.
People tend to point out flaws or act less-than-thrilled with an apartment because they think showing enthusiasm will compromise their negotiating ability. This is not true. Showing interest isn't a bad thing, on the contrary, it gives the listing agent a sense of how serious you are. Remember that in a seller's market, each individual that walks in to an open house is serious - and you need to stand out. When sellers have to decide between people, those first impressions make a difference. Would you be thrilled to sell your beloved home to a Negative Nelly? Most likely not.
STAY IN TOUCH WITH YOUR BROKERS
Bidding wars can be pretty fluid situations. If the bidding lasts a week, for example, the prices offered from Monday to "best-and-final" will obviously change, but someone could also offer all cash in the middle of the week or financial contingencies could be lifted. Your broker, coordinating with the listing broker, will know when things change, so your offer will remain competitive.
As an added insight, we often asking listing brokers the following questions when we have clients to have put in bids:
- What's the seller's time frame? Depending on how fast/slow the seller wants to move, they may look at offers differently.
- How many rounds of bidding will there be? If a seller is going to have three rounds of bidding, you don't want to bid your "best and final" offer immediately. But, if a seller is only taking "best and final," then this should change how you bid.
- How long will it take for the seller to accept an offer? If it takes a while, bid lower than your "best and final" so if other offers come in and trump yours you won't be out of luck.
- Have any of the other bidders offered all cash? This can change throughout the bidding process, but it helps to get a sense of where your offer would stand.
- Are any of the other bidders' offers contingent upon financing? If yours isn't, you can play that up. But keep in mind that contingencies can be lifted throughout the process.
MAKE AN OFFER IN AN ODD NUMBER
We suggest you channel your inner "Price is Right" contestant. Most people bid in round increments, such as $550,000 or $900,000. If you bid $553,000 or $907,000, you'll be above the last person - it's as simple as that. Bidding in odd increments also gives you an advantage of calling the next round of bids lower rather than jumping in the thousands. Though some brokers might look at this as "low balling", it really is not since it's just considered wiggle room for when "best and final" offers come through.
PUT A DEADLINE ON YOUR OFFER
Make it clear that your offer has an expiration date. More importantly, say the words out loud. Saying the duration out loud makes it more realistic and reminds the sellers and their broker of the possibility of the bid going stale. It also gives you a clear idea of when to expect a response. This will lead to the seller feeling more compelled to take your offer, and you minimize your competition.
GIVE IT A PERSONAL TOUCH
Writing a letter explaining who you are, your intentions, and why you love the apartment can go a long way. Someone who lived in a place for 15 years will have a lot of emotional ties to it, and a personal letter can help you stand out. Recently, this has been the trend in ultra-hot markets such as DC and Phoenix, where people are having difficulty letting go of prime properties because of the sheer connection they have with them. Giving the seller an insight into your character helps them get a clear sense of who you are, and who will eventually take over their humble abode.
IMPORTANT NOTE: Keep in mind that every situation is different. If you're buying a condo from a developer with multiple offers, then a personal letter won't make sense. In this case, bidding wars don't even happen. Walk-in, sign the offer, and walk out with a defined delivery date.
Selling an apartment comes with all kinds of to-do's, so help the seller check some of them off. Does the seller want to close early? Let them. Or do they want to stay in the apartment longer? Sure. Are they selling any furniture? Buy it (even if you don't want it, it could be worth it to close the deal). Just remember that their happiness equals yours, so finding the right balance (as well as the right agent who can mediate for you!) will go a long way in your battle for that perfect piece of property.