Price Bidding, Best Offers, & Bidding Wars
Making an offer on the home you want can be intimidating. Although there’s little risk of making a fool of yourself during the bidding process, you should play your cards right before you tip your hand.
Bidding below listing price.
Bidding for a property below its asking price is very common during a buyer’s market. A buyer’s market occurs when there’s a surplus of homes on the market relative to demand from sellers.
Many experts advise against bidding more than 10 percent below the asking price. However, you can sweeten a relatively low offer price by guaranteeing the seller a quick closing and a large earnest money deposit. Or, if you accept the present state of the home without demanding free upgrades and repairs, you could sway the owner in your favor over other bidders.
Highest and best offer
Sometimes sellers or their agents get restless during negotiations and ask you to quote them your highest and best offer for the home, meaning it’s a take it or leave it contract and there won’t be a counteroffer. Don’t go out on a limb if you are not 100 percent sure you want this particular property. You can always reconsider if you feel you made a mistake after researching comparable properties.
Full price offers
There’s no shame in agreeing to pay the seller’s full asking price without bartering. If the home you want is worth its price tag, offer to pay the full asking price. Another buyer may show up five minutes after you eager to pay that difference, sending you back to your search for a perfect home.
Bidding wars
Engaging in a bidding war for a property with other buyers can be stressful. As one of an unknown number of rivals in a bidding war, you’re blindly competing against each other. Neither you nor your agent will know how many offers the seller has on the table.
You may end up having to cough up a lot of extra cash for the down payment if you’re the winner with the highest bid. Instead, you could keep your cool and stay off the multiple offer- and counteroffer-carousel.
Sometimes all rivals for your dream home may call the bidding war quits. Who knows, the seller may then come knocking at your door to ask you to submit your purchasing offer. In that case, you’ll end up the real winner, possibly holding the power to barter with the seller for a lower purchase price.