Facing an upsurge in housing demand across the country, many home buyers are finding themselves in bidding wars for the limited inventory on the market. To win, buyers are trying to find ways to entice sellers beyond price—and at times are taking it too far, real estate professionals say.
Mary Lou Wertz of Maison Real Estate in Charleston, S.C., talked to The Wall Street Journal about one couple relocating from New York who fell in love with a $1.2 million, four-bedroom home online. The seller had already accepted another offer, however. The New York couple offered to pay $10,000 more than the other buyers as well as offer their competitors $25,000 to walk away from the home. They also told the seller that they would make a $30,000 donation toward a hospital for cancer research since the seller had recently lost his wife to cancer.
Ultimately, the New York couple’s offer was not accepted. The offer seemed “a little over the top” to the seller, Wertz told the Journal.
Another couple shared with the Journal how they toured 50 Los Angeles homes, submitted 16 offers—sometimes above the asking price—and were outbid every single time. But they weren’t about to lose out on a three-bedroom home listed for $735,000 in the Northridge area. “We were turning up at showings, and there would be a line of people who were there before us,” Andrea Kissling of Los Angeles told the Journal. “These houses were getting 30 or 40 offers and going $100,000 over asking.”
The buyers noticed memorabilia around the house of the Harry Potter films. So they produced a Harry Potter-themed video for the sellers (one of the buyers provides design services for Warner Bros.). The video fawned over the home and showed the couple reading Harry Potter books to their children. The couple also offered to buy the sellers VIP passes to The Wizarding World of Harry Potter at Universal Studios Hollywood.
Despite all the work, the couple still lost out to a higher offer for the home.
Chris Furstenberg of Nourmand & Associates in Los Angeles told the Journal that one of his clients—a filmmaker—once made an offer that came with the promise of tickets to the Academy Awards. Still, the seller went for a higher offer.
Furstenberg says such enticements often only work to settle a tie in a bidding war. But if there’s a higher price, that usually always wins out in the end—no matter how much buyers try to sweeten the deal with other offerings.
Boston condo bidding wars have become quite common, especially in hot markets like downtown Boston. While it’s normal to receive several offers on downtown Boston condos, it’s possible for the offers to get competitive and launch a bidding war. To many sellers, nothing sounds better than a bidding war on their home, but multiple offers could put you in a difficult situation: choosing which offer is the best. Here are some tips for handling a bidding war on your condo and how to choose the right offer.
It’s easy to get excited when you see multiple offers coming in on Boston condo, especially when offers come with escalation clauses that allow buyers to increase their offer above the highest bidder up to their cap price. You want to get the most money possible for your condo, but you should have other considerations. Keep in mind the buyer probably needs to get financing for the offer and may not be approved if he or she got carried away in a bidding war. Your Boston downtown condo value also needs to justify the higher price or the buyer will need to find a way to pay for the difference. If the loan falls through, you’re back to the beginning. The highest offer may also come with contingencies you aren’t comfortable with. A lower offer may be more attractive if it’s in cash, backed by a preapproval, or closes sooner.
When multiple Boston real estate bids come in, you may have several offers that are fairly close to each other, and you may even have an offer far exceeding the other bids. Instead of relying on the price alone, go over each offer carefully and consider any contingencies. Some buyers may be requesting stipulations that make the transaction more difficult or time-consuming to close. Requiring that the home appraises for a certain amount, the buyer secures financing, or the home receives a satisfactory inspection are all common contingencies, but there may be more. A buyer may add a contingency to the offer that his or her current home sells first before buying your condo. The fewer contingencies, the stronger the offer. If a buyer waives the home inspection, it shows he or she really wants the home, and it removes a major roadblock to closing.
Being greedy is a common mistake Boston condo sellers make in a bidding war, and it can backfire. Sometimes when bids are close, a seller will request a second round of bidding or even a third round, which can push buyers past their comfort level and make them tired of jumping through hoops trying to get the home. Pushing buyers too far can make them walk away out of frustration. Giving all parties the chance to make their best and final offer when you receive multiple bids shortens the process and gives everyone a fair chance to offer the highest they are willing to pay.
As bidding wars become more common, it has also become common for Boston condo buyers to write letters to sellers explaining how much they love the home and why it would be perfect for them. These “love letters” are designed to endear you to the buyers and encourage you to accept their offer, even if it’s not the highest or strongest offer on the table. Consider selling your home as the financial transaction it is. The best thing to do is stay objective, judge every offer purely on its merits, and avoid receiving letters from buyers.
If you’re planning to list real estate for sale in downtown Boston don’t begin the process without enlisting the help of a trusted local agent. I can be reached at 617-595-3712