WRESTLING UP A DEAL!

15 tactics to win a real estate bidding war
Business Insider
Aug 22, 2012

Canada’s housing market is slowing, but bidding wars are still common in major markets like Toronto.

And as the U.S. housing market shows signs of recovery, homebuyers are flocking to snap up deals on bargain properties across the country.

That means running into competition is par for the course — and the weakest bids will not survive.

“If you are serious about buying, it becomes a bit of a part time job,” says Zillow.com real estate expert Brendon DeSimone. “This is your home and your only investment.”

We asked DeSimone to clue consumers into how they can make their bids stand out.

Don't wait for the open house

DeSimone is quick to advise clients to see as many houses as possible on weekends––whether or not they're invited.

"With the Internet, information moves so quickly. [Sellers] could do a private showing Wednesday [days before a scheduled open house]" he says. "If it looks good online, go see it."

Check email hourly for listing updates from your broker

"If you're a serious buyer, you make it a priority in your life and you're going to get email alerts from your broker every other hour," he says.

"Be in touch with your agent and know about new properties as they hit the market."

Don't be intimidated by higher bidders

These days, investors and average joes alike are flocking to snatch up deals on homes. Don't let them psych you out, DeSimone says.

"Don’t spend too much energy trying to figure out what’s really going on with the other offers. If you love the property, keep moving forward, but at your own pace. Make the offer you’re comfortable with, and only when you’re comfortable making it."

Make sure your broker is local and well-known

That's because 80 percent of business is done by just 20 percent of brokers. The more respected they are within the community, the better shot they have at wooing listing agents.

"My clients (win) because the listing agent knows me," DeSimone says. "In a competitive situation, working with a known broker will make the listing agent feel better and boost your chances, especially if two offers are close."

Get in the listing agent's good graces

Why? Because the listing agent is the only person who meets all the parties involved in a sale.

"Though the seller ultimately decides and signs a contract, the listing agent has a giant say in who gets the property in a competitive situation," DeSimone says. "If you make a good impression with the listing agent, you are in much better shape. Acting like a jerk to the agent tells the sellers to work with another offer."

Line up an appraisal even before making an offer

Per DeSimone:

"One thing I once did was to have the bank try to get an appraiser lined up and on their calendar before an offer was made. That way, the buyer could tell the seller that the appraisal would happen within x days of signing a contract. If you tell the seller two or three weeks, your offer looks weaker."

Look for the WORST house on the block

It may sound counterintuitive, but you're better off looking at a fixer-upper than going for the McMansion next door. Chances are competition won't be as fierce.

Says DeSimone:

"You can always improve the property and therefore increase its value. And because it’s on a great block, improvements you make to the home will be practically guaranteed to give you a top return on your investment. Just don’t get carried away and turn the worst house on the block into the biggest and most expensive one."

Keep tabs on your mortgage lender and rates

Once you've been pre-approved for a loan, have your mortgage broker or lender write a letter saying as much.

"Even reference the property so that the listing agent knows that the lender/mortgage broker is up to speed," DeSimone says.

Keep an eye on current mortgage rates

"Sometimes the rates drop or increase significantly from the time you first spoke to the lender and the time you write an offer," DeSimone says.

"If rates have decreased, maybe you can afford more. You should know this."

Know your neighbors––and what their homes are worth

Getting to know the neighborhood you're hoping to call home one day goes far beyond scoping out local schools and seeing who prowls the streets at night.

"When you are ready to seriously write offers and compete, you should know what is going on with the local neighborhood market," DeSimone says. "Follow what has recently sold, what was competitive and what was not."

Try bending the rules a little

Per DeSimone:

"One thing I did in the past was with a very serious and motivated buyer. The home was vacant [sellers moved out]. So, we went in with an inspector because the home had a lock box. The buyer did their inspections before writing the offer. This way the buyer could make an offer knowing what the issues were, if any. And, for their offer they could waive their inspections contingency. No inspections means no risk for the seller."

Hire an inspector within two days

"Order the inspection before you write the offer. It doesn’t necessarily have to be two days but your offer should show the seller that you are prepared to move quickly," DeSimone says.

"If you wait two weeks and then the inspector finds something and you walk away, the seller is left out to dry. The seller wants to know this is out of the way quickly."

Use cash to put your bid over the edge

More often than not, most homebuyers simply can't afford to plop down $180,000 in cash on a new home.

But when it comes to sweetening your bid, offering to pay at least the deposit in cash could push you over the edge.

"The more you offer, the better," DeSimone says.

Put your passion into words

Once you've had the chance to get to know the current owners, don't be afraid to appeal to their interests the old-fashioned way.

"I've seen buyers Google the owners and see that they have a love for horses, so they wrote them a letter talking about their love for horses, too," DeSimone says. "Sometimes it'll work [to give you an edge]."

Don't get distracted by what you can't afford

As with any bidding war, it's important to be quick on your feet. People slow themselves down when they don't stick to what they can afford, DeSimone says.

"Know your limits on the high and low end. Knowing this will allow you to act fast," he says, as it'll help your broker weed out properties out of your range.

Photo By: Fabbio