Here’s How To Win A Real Estate Bidding War

Here’s How To Win A Real Estate Bidding War

Swapna Venugopal Ramaswamy, USA TODAY  Thu, July 29, 2021

‘I don’t care that I’m overpaying’: Houses are selling over asking price. Mystoura "Misty" Afolabi, a real estate agent in the Los Angeles area, was working with a young family for more than a year, trying to find them a home. But every time they saw a house they liked, they were outbid. Then in March, the couple decided to bid on a house even before they had a chance to see it.

The two-bedroom, two-bath property was listed at $585,000, well below market value – a tactic increasingly used to trigger bidding wars in a super-competitive, pandemic housing market.  The couple offered $620,000, or $35,000 above asking. Their offer was rejected.  “We couldn’t believe it,” says Afolabi, an agent for Redfin.

However, the homeowners, who had received 32 other offers, reached out to the five prospective buyers with the highest bids, including Afolabi’s clients, and asked them to come up with their best offer.

Having made the shortlist, the young couple, who have three kids, decided to see the house. “We met with the seller’s families, and both families got along really well,” says Afolabi. “They loved the house even more.”

The couple sent in their next offer at $650,000 with reduced time frames on inspection, appraisal, and loans. They increased their down payment to 50% from the standard 10% to 20%. They also wrote a letter to the sellers highlighting the specific things they had loved about the house. In the end, the couple beat out the competition, some of whom were investors and developers offering all cash.

Nearly three-quarters (74%) of offers written by Redfin agents in April faced bidding wars, according to the real estate brokerage. On average, every home sold in March had nearly five offers on it, according to the National Association of Realtors.

The housing market continued to break records in April, as home prices rose 21% year-over-year and the median home-sale price soared to $348,500, according to a report by Redfin.

The report also found that 48% of homes sold for more than their list price, with the average home selling for 1.4% more than the asking price.

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