It’s no secret that real estate is making a comeback. I have written recently about inventory levels dropping and the market heating up. While we have not yet seen that same level of price increases, there is no doubt that activity is picking up and one of the best ways to gauge that is by paying attention to how quickly homes sell, and how many offers they get.
Over the past few months every single transaction I have been involved with was a multiple offer situation. Look, I understand it’s frustrating, especially if you have been looking at homes and making offers. Everyone wants the best deal possible but that means different things to different people. Recently a client told me, “I don’t want to get into a bidding war.” Then they proceeded to make an offer $20,000 under list price, knowing there was already another offer on the table. Result? Bidding war!
So what’s a buyer to do? Here’s my advice. If you want the house then make the best offer you can. Simple. If you are looking for a deal and that is the only thing that matters, then make whatever offer you want, but don’t be surprised when you lose out…after a biding war. Consider that interest rates are at record lows…under 4% for a 30 year fixed rate mortgage! The difference in monthly payment if you pay $300,000 or $320,000 is about $50/month. Is it worth losing out on the home you really want over that?
My point here is not to have you overpay. It’s to help you understand the realities of the market and help you get what you want…a nice home at a fair price. Every real estate transaction involves some give and take. I learned a long time ago that a successful negotiation is one where everyone walks away feeling like they won. If you are a buyer that “Win” should be you becoming the successful bidder. And the best way to insure that happens, and to avoid a bidding war, simply make your first offer your best offer. At least if you lose out you know you went down swinging!
I will have a follow-up to this post in a few days outlining some strategies for what exactly is the best offer to make. Hint: It’s not always about the price. Stay tuned.