It used to be that bidding wars were clustered in the spring, but bidding war season seems to go all year round now. Until the local housing shortage ends, bidding wars will be with us. However, there is a silver lining to this situation: when a house does not sell quickly, the price becomes more negotiable.

Bidding Wars, 2024 Update:

  • In our company, so far this year, we had clients get offers accepted for $50,000 or more under asking price four times. Total of those four = $368,000. We negotiated $458,900 under asking price this year, so far in total.
  • We also assisted our clients through bidding wars, where they paid asking price or over.

Is this property being marketed to encourage a bidding war?

The biggest advantage to buyers is to know which properties are priced correctly from the beginning. The properties that are not marketed well will have negotiable prices in a few weeks, or months. Knowing this takes experience.

In bidding war situations, sometimes agents set the initial asking price to below its value. This works to get a lot of people to make offers. Some of those offers will be lower than the value of the property. But competition makes other buyers willing to offer their top dollar. The hope – for the seller – is that some buyer gets more invested in winning than in spending a market price for the property.

When faced with multiple would-be buyers competing for a single house, the typical buyer needs help. Part of what a skilled buyer’s agent brings to a buyer is the knowledge of how asking prices relate to true market value.

The best decision in a bidding war comes from discerning what is more important, buying that particular house or not regretting overpaying for it.

Which would you regret more? Not getting the house and finding out the top offer was $5000 more than yours or getting the house, then finding out that the offer below yours was $10,000 lower?

What you need to do with your agent

A good agent will be able to tell you these things about the property: 

  • What should this house sell for, given a study of recently closed houses like it.
  • A guess at the competition.
  • How typical is the house? Will there be more like that? Is this a common layout that fits in your price range? Have there been other similar houses in your search (if so, there will be other similar houses coming onto the market). If there will be more like that, you have more options to let this one go.

How you can use this information:

Based on what a house is worth, how many other people may make offers, and how typical a house is, buyers can make a monetary decision. Buying a home is more permanent than most purchases, and it affects your everyday life. Therefore, personal decisions come into play.

Do you have deadlines that will cost you money or peace of mind?

  • Is there a monetary value to getting the home search completed, like a lease deadline?
  • Is there a personal deadline that makes getting the move completed that will significantly reduce your stress, like the beginning of a new school year, the start of a new job, a pregnancy?

Is the house special for you?

  • It is particularly near something important to you, like a friend or family member?
  • Is there a feature that you really love? Is it particular to this house, or could you create it in another house? If it is unique, the house is special.
  • Is the land unusual, in a good way?

Finally, if you buy this house at this price, will the monthly carrying costs overwhelm you for years to come? Will you resent the expense and the loss of things they could have spent that money on?