“Oh no! We’re in competition!” Buyer’s viewpoint
These words are dreaded to a lot of buyers. Why is that? Because competition scares a lot of people when it comes to real estate transactions-especially as a buyer.
Auctions are interesting events. Many people go to either get a good deal, buy something rare, or in a lot of cases, go to help out a charitable organization. But something interesting happens at auctions beyond the bidding and buying of lots. There are transformations.
Transformations of every day normal people into competitive beasts.
You know you have seen them. Two people see an item. They each take an interest and each think to themselves, “I think I want that. And I am willing to pay x.” They may even tell people around them their plan. And then, someone else in the room has the same plan-and they become aware of the other's similar idea.
For astute auctioneers, this is gold.
They can then play on the emotions of the bidders and the price starts to go up.
So, what started out as a dream to get something at a “good” price, suddenly morphs into an obsession to own it at any cost. Sometimes, it will even go beyond the intrinsic or market value of the item. Why? Emotions. Bidders get so taken by the fact they may “lose” to someone else that they stay in the game at costs beyond what their instincts would say under normal circumstances.
It is no different with houses and real estate.
But what can we do to minimize the stress?
1 – Realize if you like a house, it is probable that others will too. So be prepared to go into competition every time. Negative surprises shake you. Expectations prepare you and then you can deal with them less emotionally. Then if it doesn’t go into a competitive situation, you can be pleasantly surprised. A much better feeling.
2 – Be prepared to act quickly. Work with your mortgage broker and Realtor® to be ready to pounce. If you are pre-approved for a mortgage you can act swiftly. If your wants and needs are well defined with your Realtor® - when you see the home that is right for you, decisions can be made quickly.
3 –Make it simple. Understanding all the hurdles you need to leap over is important. Do you have to sell before you buy? Do you have access to healthy deposits? Are you flexible with possession dates? The simpler an offer, combined with advantageous terms toward the seller’s circumstances, the more attractive you can make your offer.
4 – Be willing to tell your story. Since you do not know the sellers, you do not know their motives. But, most people want the house they are selling to go to people they can relate to. This is not always the case but can go a long way. By honestly telling the seller who you are, you may find an emotional connection that binds you to the sellers and can sway decisions in your favor. (We've seen some interesting deals come together because of a connection, in situations that would not otherwise have worked out.)
5 – Know your price. This sounds simple, right? But you probably only have one shot at being the selected buyer when you’re in competition. So pick a number you are willing to both win and lose at. Now that sounds strange doesn’t it? Two numbers? No. Find a number that you would be willing to win the bid at. Meaning a number that if you are successful, you will not go “I paid too much”. And, if you lose, and see the final price, you will not say “Darn, I would have paid THAT if only I had known”.
6 – Remember there are probably more homes that you will like. Communities are usually built with a lot of similar homes to each other. Unless you are so stuck on that one property, it is probable that you will find another, even though it may not feel like it at the time. If you are sure that there is only one, then revert to point number 5.
What is wrong with competition? Were you hoping to get the property below market value? Were you hoping to come out ahead in some game of negotiations? Or, perhaps, you are deathly afraid of paying too much? Maybe, you are just afraid there is only one dream home for you?
Don’t be afraid of competition. If you keep all six things in mind, win or lose, you can walk away feeling ok. And either you will own a new home or you will find another.
Are you a seller facing competitive offers? Then this blog post is for you!