A Message from Shannon on Bidding Wars
Why Bidding Wars Are Starting Now
With businesses reopening throughout the country and some experts indicating early signs of a much-anticipated economic recovery, more homebuyers are actively entering the housing market this summer. Today, housing is truly driving the U.S. economy forward. With so many buyers looking for homes to purchase and so few houses for sale right now, there’s a disconnect between supply and demand. This imbalance is pushing home prices upward while driving more bidding wars and multiple-offer scenarios. Danielle Hale, Chief Economist at realtor.com explains:
“People are surprised that prices are rising, not falling, because in the last recession home prices fell, the difference this time is the severe shortage of homes for sale…We are seeing bigger price increases with [a limited] number of homes…That is likely to lead to more competition and potentially multiple offers and bidding wars.”
What the Experts are Saying
According to the recent Realtors Confidence Index (RCI) survey conducted by the National Association of Realtors (NAR), this trend is growing:
“On average, there were about three offers on a home that closed in May, up from just about two in April 2020 and in May 2019 (2.3 offers).”
HousingWire also indicates:
“42% of homeowners who made a purchase during the January to May time period ended up in a bidding war, demonstrating the strong demand for homes amid low inventory.”
How Can You Win a Bidding War?
With more people returning to work we’ll continue to see the number of interested buyers increase. So, if you’re among the many people looking for a home to buy this summer, it’s important to ensure you have the right guidance from the start. This way, you make sure your offer stands out from the crowd when it really counts. Here are our tips to win a bidding war and get your dream home!
1. Strong Pre-Approval
When there are more buyers than sellers on the market, the process to find a home becomes much more challenging. One way to show you’re serious about buying a home is to work with a lender to get pre-approved for a mortgage before starting your search. Not to mention, because of the pandemic, pre-approval is now required to enter a home that’s on the market. So it’s a good idea to get this step taken care of with a reputable lending company.
2. Strong Offer
A strong offer involves more than just asking at (or above) asking price. It’s important to consider not just your wants and needs as a buyer, but the seller’s wants and needs as well. Think about what timing would work well for them, and consider this when deciding on your occupancy and possession dates. It’s also good to be flexible with a rent-back for the seller and don’t try to strongarm them into including items like appliances or electronics into the sale if they don’t want to.
If you find yourself in a bidding war, you want to make sure the seller gravitates towards your offer because you are being considerate of them and their needs as well. Your agent can help you decide which factors can create a strong offer. Which leads us to…
3. Hire a Local Agent
If you hire a local, experienced agent, they may have connections to other agents in the market. They can gather intel about the other offers and see what you can do to make your offer stand out. A local agent will also be the expert on prices and can let you know if the home you like is being offered below asking price. This is something sellers do to drive the price up, so you can know if your offer is likely to be accepted or not, or if you’re likely to get in a bidding war.
Hiring an experienced agent is especially important right now. We are in the middle of an unprecedented global health crisis and this has made the home buying process even more complex. By hiring the right agent, you are getting the most up-to-date, expert information in the market. A local agent knows the new steps involved in the home buying process as well as what sellers are looking for.
Still Have Questions?
If you have any questions about the current market, please give us a call at 562-896-2456 or fill out the form below and we’d be happy to answer your questions. For a free buyer’s guide, please click here.