The real estate bidding wars have become a very common practice in real estate and so with the changing times it has become very crucial to understand wht the seller wants and accordingly prepare the buyers without getting frustrated about the entire process. Bidding wars are common in neighborhoods with strong demand and low supply and may often start when a home is in the market. What is everyone doing in the process is trying to be the last one standing.
When more than two buyers present offers for the same home is the start of the bidding war. To initiate the process buyers' agents send the offers to the listing agent. The listing agent presents them to the seller. From July 1st according to the Bill 55 every offer has to recorded using the Form 801 as per the law. The listing agents present all written offers to their sellers, and present together offers that come in at the same time. The full-scale bidding war breaks out when there's no clear winner. In these instances, the sellers ask the buyers to sweeten the deal. Buyers then come back with better offers. Sellers may entertain several rounds of offers before making a decision.
If you're planning to buy a home in an area where there's high demand, preparing early can give you an edge. It's imperative that you get your finances -- and financing -- in order before you start looking at homes. Have your loan preapproval in hand for your first appointment with a real estate agent. Proof of funds can help, too. Proof of funds includes bank and investment statements showing you have access to enough cash to pay the deposit and closing costs.
Preparing an Offer
Know what your bottom line is before you prepare the offer, then prepare your offer accordingly. In an area where competition is especially fierce, you may need to go in with your highest and best offer if you have your heart set on buying the home. Otherwise, give yourself a little wiggle room, but show the seller you're realistic. The seller may reject your offer outright if it's not competitive with the others.
Buyers likely to wind up in a bidding war should structure their offers to make the sale as quick and safe as possible for the seller. Sellers should evaluate multiple offers with an eye on the big picture. Although the purchase price is certainly important, so is the earnest money deposit. The higher the deposit, the less likely the buyer is to walk away from the sale. Money is not the only motivating factor, however. A buyer who has the home inspected before making the offer can offer to buy it as-is, assuming the condition is acceptable to the buyer and the buyer's mortgage lender. Similarly, a pre-offer appraisal may eliminate the need to make the sale contingent on the home appraising for a certain amount. The buyer might also offer a quick closing, if the seller is in a hurry, or allow the seller to remain in the home after closing if she needs more time. Finally, it's not unusual for a seller to be influenced, if not swayed, by a heartfelt letter from a buyer asking for special consideration.
These are some of the steps that will help your clients while dealing with a bidding war. If you have come across few other suggestions feel free to leave comments below.