6 Dos and 3 Don’ts for Winning Your Next Bidding War
When you’re representing a buyer in a multiple-offer situation, a savvy strategy can make all the difference. Here are some expert-approved dos and don’ts for helping your buyers come out on top.
- Clarify your buyer’s financing with the seller’s agent.
- Discuss with your buyer the implication (and attraction) of waiving certain contingencies.
- Use a distinctive offer price.
- Build a rapport with the listing agent.
- Understand the seller’s preferred timeline and work to accommodate it.
- Strategically time your offer and deadline.
- Open your buyer up for possible discrimination with personal “love letters” — instead have them write a letter about the home itself and why is it so attractive to them.
- Waive all inspections and contingencies unless they have sought legal guidance first.
- Let your buyer’s emotions take over.
Now for some more detail:
DO: Clarify your buyer’s financing with the seller’s agent
Make sure the seller’s agent understands exactly how your buyer will be financing the home. Encourage your client to get pre-approved for a loan so you can include their pre-approval form with your offer.
To go the extra mile, have the lender reach out to the seller’s agent directly. This proactive step will boost the listing agent’s confidence your offer will close.
“I have a lender who sends the listing agent a video text about the buyer’s financing, and it’s a hoot!” says Michelle Balog, founder of Bay Real Estate Group. “Little touches like that make your offer and buyer stand out.”
DON’T: Open your buyer up to possible discrimination
Many agents encourage their buyers to write personalized letters to the sellers appealing to their emotions. Be careful with this practice: If these “love letters” reveal information about the protected classes (e.g., familial status, race, gender, etc.) your buyer belongs to, they could be making themselves vulnerable to discrimination. If your buyer wants to write a love letter, have them write it about the home itself, the neighborhood, or other amenities.
“This is an opportunity to really make your buyer’s offer stand out,” says Spencer Krull, managing broker for Southern California at Side. “Most agents are now avoiding buyer letters, so get a neutral and safe letter from your buyer that avoids any questionable fair housing topics (such as family, age, or race) and instead gushes about how much they love the property and how wonderful the owners are for having lived there.”
Kyle Madorin, founder of Upwell Realty, likes to add perks to his offers that appeal to the seller’s emotions without referencing the buyer’s protected classes.
“While we're touring the home we're looking for hobbies, favorite restaurants, anything we can use to our advantage,” says Kyle. “Being near Walt Disney World, we have a lot of Disney fans locally, so throwing in dinner at their favorite Disney resort is one small token we can include that sets our offer apart and makes it slightly more appealing to the seller. Sometimes it's the little things that make the difference!”
DO: Consider waiving certain contingencies
When it makes sense to do so, going easy on certain contingencies can further enhance your offer. For example, if your client is not required by a lender to get an appraisal, you may consider opting out of one based on inspection results. It is always advisable to have your buyers talk with their local real estate attorney before removing or waiving any contingencies.
Caroline Fuller, founder of SOCO PROPERTY, will ask her buyers to consider waiving the appraisal, but only if she knows they can afford to pay the difference — and only once she’s fully educated them on what will happen if the appraisal comes in low.
“I just had clients who bid $50k over on a property, and it appraised,” says Caroline. “I knew all the comps and was prepared to justify it — it’s the market we’re in!”
Sellers want a simple, straightforward escrow. The more hurdles you can remove, whether by waiving contingencies or shortening contingency windows, the more attractive your offer will be.
DON’T: Waive all inspections and contingencies
Never waive inspections just to win a bidding war — you don’t want your clients to discover major issues with the property for the first time after closing.
Says Caroline: “Most listings in my neighborhood come with complete disclosure packages, so the inspection contingency can be removed. However, if inspections have not yet been completed, I will book them and share the schedule along with our offer.” That way the sellers have confidence that closing will proceed on time without cutting buyers off from key info about the property.
And think carefully before removing the appraisal contingency as well — if the appraisal does come in well below the offer price, your buyers could get stuck with a property they can’t afford.
“I try not to let my clients bid when the price is in the stratosphere and there’s a ‘no appraisal’ contingency,” says David Feldberg, founder of Coastal Real Estate Group. You have a fiduciary duty to ensure your client is purchasing a strong real estate investment — don’t let a fast-paced market overstep this goal.
DO: Use a distinctive offer price
John Woodruff, founder of Aethos Real Estate, has a simple but effective secret weapon to make sure his offers stand out: unusual numbers.
“Most humans think in terms of zeros and fives,” says John. “So I always price just a little above where someone typically rounds to. I just won a bid where we bid $1,856,200. By sheer coincidence the next highest bid was … $1,856,000. We won it by $200!”
In a multiple-offer environment, that small distinction can be enough to set your offer apart from the fray.
DO: Build a rapport with the listing agent
This one seems basic, but a shocking number of agents underestimate how important it is to form a relationship with the seller’s agent. Anna Bellomo, founder of District Homes, says: “As a listing agent, I’m always surprised at how often agents who have never called me end up submitting offers. Being in communication with the listing agent from the beginning definitely gives you a better chance of getting your clients in contract.”
David makes building a relationship with the listing agent a priority. “From the moment I contact the listing agent to let them know my offer is coming, my goal is to make them my new best friend,” he says. “I work to convince them that we are the likeliest buyers to close, that we will be easy to work with, and most importantly, that we will make the listing agent look good to their sellers.”
DON’T: Let your buyers’ emotions take over
Many buyers, overwhelmed by all the competition, let their emotions get the best of them. As their agent, it’s your job to keep a level head — to fight for their interests but also know when to walk away.
According to Hayley Kerstein, lead buyer’s agent at Elevation Real Estate, your ability to keep emotions from running hot is one of your key value propositions as an agent. “Now that everyone does everything online, I think a lot of people are asking if agents will become obsolete at some point,” she says. “But buying a home is such an emotional process — I dare you to do that without an agent, especially in a fast-paced market.”
Make sure that your client does not lose sight of their budget and goals simply because they’re passionate about a potential home or frustrated that previous offers were rejected.
DO: Understand the seller’s preferred timeline and work to accommodate it
The promise of a fast close can be very enticing to certain sellers, like those who are closing on a new purchase simultaneously. If you know the seller wants things wrapped up quickly, talk with your lender to see how fast you can close.
Or, if you know the seller would like to stay in the house past closing, you could offer a rent-back agreement. Says Alex Wang, founder of Rainmaker Real Estate: “If the seller wants to stay a few days or weeks after closing, you could even offer a free rent-back. This costs the buyer just a little more, but it can give the seller much-needed breathing room and reassure them of the buyer’s sincerity.”
If your offer includes financing, keep in mind that many banks will not allow a rent-back agreement to extend beyond a certain amount of time.
DO: Strategically time your offer and deadline
When you’re expecting multiple offers on a property, figure out from the seller’s agent when offers will be presented to the seller — and keep in mind that offers usually aren’t presented to the seller at the exact same time they’re due to the agent.
Aim to submit your offer after the seller reviews other bids, and be sure to include a strict expiration time with your offer. This will keep the seller’s agent from having time to shop your offer around to other interested parties.
The time you set before your offer expires will depend on the speed of your market. “In the Silicon Valley market, it’s customary for me to submit an offer in the early afternoon that expires later that same evening,” says Alex.
Representing a buyer in a multiple-offer market is both a marathon and a sprint: You have to have patience and take time to craft the best strategy, but also be ready to move extremely fast when necessary. Keep these strategies in mind next time you’re seeking ways to make your buyer’s offer stand out in a crowded field.