How to Win a Bidding War

You finally found your dream house. It has everything you ever wanted and more. The stars have aligned and all is well with the world. Right? If there are other bidders for the same property, not necessarily. Heated markets on the upswing, in the past few years, have generated multiple offers on some properties. A seasoned real estate professional with knowledge of the local market is your best ally in a bidding war.

There are two points you need to establish early on: how much the home is really worth and how high you are willing to go. Bear in mind that some properties are intentionally underpriced in order to generate multiple offers and extract the highest possible selling price from frenzied bidders.

In determining how high to bid, it is important to take your long-term housing plans into consideration. If you are looking to stay in the home for under 5 years, there is not much sense in bidding too high. On the other hand, if you plan on staying for as long as possible, it might be worth it to extend an aggressive offer in order to come out on top. Even if you end up paying a little bit more, you will not have any regrets in the long run, especially if the property realizes a healthy appreciation over time.

Bidding wars are not for the squeamish or those with a low tolerance for taking chances, but an experienced Realtor can help mitigate the risk by carefully assessing the true market value of the property and the “actual” cost for you to purchase it. The actual cost equates to the purchase price, plus the cost of any upgrades or repairs needed to make the home suitable for you. If multiple offers result in an above-market purchase price and an additional investment is needed for a renovation, it may be wise to walk away.

Given the fact that decisions in bidding wars are pressure-packed and fast-paced, it is best to strategize with a professional. A good Realtor will help you maintain an even keel. The last thing anyone would want to do is overpay for a property just because of being carried away by emotions and the need to win the war.

Winning is great but it is not the only thing that matters. It is more important to come away from the bidding process feeling comfortable and confident that you put forth your best effort by bringing in a competitive and educated offer, aligned with your long-term real estate goals.