A bidding war occurs when two or more interested buyers want to purchase a home and provide higher offers in an attempt to gain custody of the property. This occurrence impacts buyers and sellers differently.
When selling your home, you always want to get the highest offer you can. A bidding war can drive up the selling price of your home substantially. However, as a buyer, this means shelling out more cash and creates a roadblock between you and your dream home.
Knowing how to navigate through a bidding war and what to expect as a buyer or seller can help ensure you leave the situation with the best outcome possible.
Benefits of bidding wars for sellers
When selling a home, having multiple offers is an extraordinary positive. You may wind up selling your home for a far higher price than you initially anticipated which bodes well for your financial situation.
As the housing market continues to strengthen, bidding wars will become more popular, according to SF Gate. Demand for housing increases and more interested buyers want to purchase the best houses on the market.
"The housing market has been skipping along the bottom since 2007," said Doug Breaker, president and CEO of HomeFinder.com in Chicago, according to Bankrate. "There's pent-up demand now as people are finally realizing prices won't go too much lower."
Sellers can control the price and by knowing how to manipulate the situation, they can initiate a bidding war.
Get a bidding war
Making your home appealing is the key to initiating a bidding war for your house. Location is one of the most important aspects of this.
"To get a bidding war, you have to have a good location," says Brendon DeSimone, a real estate expert in San Francisco, according to Bankrate.
A great location means you are in a desirable neighborhood. Money Talks News indicated a good neighborhood has strong community, homeowners who make investments in improving their property, low crime numbers, a safe area for pedestrians and bikers, strong local schools and noticeable development in the area.
In addition to having a home in a desirable location, you will want to price it lower. Overpricing will not attract a high volume of interested buyers and that's what you want.
"You don't want to go much lower than what the house is really worth because when you underprice, people will think something is wrong and start lowballing you," said Michael Corbet, author of the novel "Ready, Set, SOLD!", according to Bankrate.
This is where a real estate agent can be especially helpful. You should use comparables, or other homes in the area that have recently sold, that are no older than 60 days. This can give you an accurate idea of what your home's value is and can help you properly price it to encourage multiple offers.
In addition, you may want to hire a professional appraiser to check out your property and give you a price. This can also help you and your real estate agent decide on an appropriate price for your home.
Host an open house for real estate agents and buyers
If you can get the attention of a buyer's real estate agent, you can get more potential buyers to gain interest in your home. Ensure that you put on a good show when you host your event. Have all esthetic issues remedied and consider hiring a home stager to really make your home stand out. According to Realestate.com, hosting an open house allows you to create the best first impression possible.
Staging a house can make it sell quicker and for a higher price. In addition to looking appealing to a real estate agent, it allows an interested buyer to envision themselves in the home when they finally come to look at the property. This may lead to a heightened likelihood of a bidding war if more individuals find the home appealing.
"It has to look like it's out of the Pottery Barn magazine," said DeSimone, noted Bankrate. "Buyers fall in love with how it looks."
Ensure that you also host an open house for interested buyers as well. You want to advertise your home as much as possible to gain the interest of multiple people. Also consider scheduling showings of your property back to back so buyers will hear one another discuss the home and their interest in purchasing. This can put a bit of pressure on those who want to make an offer on the house.
You want buyers aware of your newly listed home. Make pamphlets, brochures and other material to market your home. Consider releasing it before listing to build a buzz. Ensure that all photographs are clear and well lit. A real estate agent can often assist you with this and ensure you properly photograph the best features of your home.