If you’ve been planning on buying a home, there’s a good chance you were hoping that the good news about higher interest rates would be that there would at least be fewer bidding wars.
But despite rates and the economy edging some buyers out of the market — and others just deciding to take a break from searching for a house — there’s a good chance you’re not feeling like the market has bid farewell to bidding wars at all.
According to Yahoo Finance, bidding wars are still very much a thing in 2024, with some houses receiving upwards of 30 offers.
So it’s completely understandable if you’re starting to wonder if bidding wars are the new normal, and are just something buyers will have to deal with forever at this point.
Real estate is driven in large part by supply and demand. And, for quite some time now, there simply have not been enough houses for sale to satisfy the number of buyers competing for them, which has been the reason bidding wars have continued even after rates went up.
However, supply and demand isn’t the only thing that causes bidding wars. They can occur even in a “buyers’ market” where there are more houses for sale than there are buyers looking for a home.
It doesn’t matter if it’s a recession, depression, or the best economic period ever; if a seller prices their house appropriately for the current market conditions, and there’s more than one buyer looking in the area and price range that house is in, there’s a good chance there will be a bidding war.
In other words, they’re something you always need to be prepared for and expect.
Whether you’re in a market where bidding wars are the norm or not, it pays to be prepared and ready to compete. Here are 5 things you should do to increase your odds of success if you’re competing against multiple offers:
1. Be ready to prove you can pay the price. If you’ll need to obtain a mortgage to complete the purchase, have a recent pre-approval from a reputable lender ready at all times. If you’ll be paying cash, make sure you have bank records to prove you have the money accessible.
2. Don’t let a listing linger. Go see any house that you have interest in as soon as possible, and if you like it, put an offer in writing as soon as possible. It may not help you avoid a bidding war, but it’ll ensure you’re in the mix, and show the owners and their agent that you’re a serious and interested buyer.
3. Make a strong, competitive offer that you’re comfortable with. Just because there’s a bidding war, that doesn’t necessarily mean a house will sell for over the asking price, but there’s always a chance. Be prepared to offer your best and final offer if and when the owner and their agent ask for it, based upon what you feel the house is worth, and how much you feel comfortable paying. Also try to keep your contingencies to a minimum, without taking on more risk than you’re comfortable with.
Despite how it may seem, bidding wars are never happening on every house for sale in the entire market. So, if you’d like to avoid getting involved with bidding wars, it’s possible, but it might entail doing things that other buyers aren’t doing, such as:
1. Look for houses in areas with more supply than demand. If you may have your heart set on a certain town, that probably means a lot of other buyers do too. Perhaps there’s an area a bit outside of your desired area with a longer commute, or that doesn’t have as many amenities as the town at the top of your wish list, that other buyers are overlooking.
2. Look in price ranges that are in less demand. While you can’t look at houses above your budget, you can always look in price ranges below the amount you can afford! Sometimes one price range has more active buyers than others. For example, perhaps there’s a fixer-upper, or just a smaller house you could buy in a lower price range that doesn’t have as much competition.
3. Look for houses that the owner has overpriced. It’s a common mistake for some sellers to overprice their home. When they do, it can cause other buyers to overlook or dismiss the home until the owner reduces their price to a point that is appealing. Rather than wait for the seller to come to their senses, make an offer and patiently negotiate with them while other buyers are focused only on the houses that are priced appropriately.
Bidding wars have become increasingly prevalent in many areas and price ranges, defying the expectation that rising interest rates would take competition (and possibly even prices) down a notch for buyers.
While bidding wars may seem like the new normal, they’re not a recent phenomenon. Dealing with a bidding war is always a possibility in any market (if a house is priced appropriately), so buyers should always be prepared and act quickly.
However, exploring areas with more supply, targeting overpriced homes, or looking in less in-demand price ranges may be a possible solution for those seeking to avoid bidding wars altogether.
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