Bidding wars have become a common occurrence. If your Seller has a desirable home in a hot market, multiple offers are extremely likely. Here are a few ways to help your clients keep a level head during the stress and excitement of a bidding war.
Setting Sellers up for a bidding war
A bidding war doesn’t happen in a vacuum. And in a hot Seller’s market, things can move exceptionally fast. This means that your Sellers could be tempted to make decisions as quickly as possible. Before the jump headlong into a huge decision, consider the following.
Managing client expectations
Managing your client’s expectations is one of the most important parts of a bidding war. Understandably, if multiple offers come in for a property, the Seller is going to be elated. However, it’s important that you reel them in from the beginning and ensure that they make calm, rational decisions.
As your Sellers prepare to enter a red-hot market, it’s important to manage their expectations. It’s extremely easy for Sellers to be wooed by higher-than-ask offers or get overwhelmed by multiple offers. Create a gam plan for your clients early and encourage them to stay the course as much as they can.
The highest offer may not be the best offer
One of the most common hurdles in a bidding war is when Sellers become enchanted by the highest offer, even if it’s not the best offer for them. Some Sellers might be enticed by all-cash offers, a common bargaining tactic that Buyers with access to cash rely on, even if it means a slightly lower selling price.
Other factors to consider include the timeline for closing (the highest offer may not want to close right away) and their financing situation (do they actually have access to the funds needed for the mortgage?).
What additional items does the Buyer want included?
It’s important that your clients understand the details of all of the considered offers. One offer might be very high, but the potential Buyer could be asking for concessions at closing. After comparing dollars to dollars, you might find that a lower offer is actually a better offer because the Buyer is asking for less. As the Seller’s agent, you can help them understand these nuances.
Make sure Sellers know the rules
Legally, real estate professionals are obligated to withhold certain pieces of private information about potential Buyers (and their own clients). But does your Seller know that? Explain that you can’t tell a Buyer what number they need to win a bidding war, for example. Sellers may think that you can divulge any information that you’re privy to, but it’s up to you to manage their expectations.
Choosing an offer
Once you and your client have a bidding war on your hands, it’s time to start sorting through the offers. Help your Seller decide which offer has the best balance of price, timing, concessions, and other influencing factors. Hopefully, when the bidding war is complete, you’ll have a happy Seller and a happy new home owner.
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