If you’re searching for a home, you’ve no doubt heard your fair share of bidding war horror stories from friends and relatives going through the process. While bidding wars are an unfortunate reality in many areas, not everything you hear about them is true. I talked to Seattle real estate agent Katie Melton to separate fact from fiction.
Myth #1: It’s not worth trying to buy in a hot market — I’ll get outbid no matter what.
“This is entirely untrue,” Melton says. “I’ve been able to get more than 80 buyers into houses in a market that’s historically and annually competitive, and every single house we write an offer on has a bidding war.”
Melton believes the key is to find an agent with deep experience in the local market. “I always sit and have a consult with prospective buyers where I talk with them about what they can afford and what they’re comfortable with, and then we adjust their price down to give them a buffer so that they can be competitive and win.”
Myth #2: The home will always go to the highest bidder.
Even though price is always a top factor, there are many strategies that can help you create an attractive offer, so it’s important to find an agent who can help you navigate the tools available. Melton suggests looking at contingencies.
Let’s say you found your dream house, but you couldn’t go much higher on its price. “What if we supplemented that low escalation with fewer contingencies, like waived inspection or financing, or having early-release earnest money?” These strategies have helped Melton’s clients get into new homes even when they weren’t the highest bidders because they help ensure a quick and smooth closing process.
Myth #3: I can’t compete with all-cash buyers.
“I’ve beat all-cash offers a couple of times,” Melton says. Cash is king because it virtually guarantees a quick closing, but Melton notes that sometimes cash offers can’t escalate as competitively as someone who has financing.
“We want to make sure that our buyers are always partially underwritten or had desktop underwriting,” she says. “That allows me to confidently tell the listing agent that even without cash, the likelihood of this loan having any surprises is as close to zero as you can get.”
Myth #4: Bidding wars die down during the winter.
“This is historically true, but currently, a bit of false hope,” Melton explains. Bidding wars in the winter are commonplace now. The reason it gets confusing is that there have been so few listings in the last three years, and then in the winter, even fewer listings. At the same time, Melton notes that interest rates are low enough that many excited buyers compete for them.
Myth #5: I’ll get stuck in a bidding war if I go for a townhouse or condo, too.
“Townhomes and condos are less susceptible to bidding wars, and they’re wonderful options if they suit your price range and lifestyle,” Melton says. In Seattle, for instance, a buyer around the $600,000 range could get a nice townhouse over 1,000 square feet without so much competition from other buyers. There may be more room to negotiate and more time to create your offer. **Every market is different. In the Columbus market townhouses and condo’s are just as competitive!**
Read more at Apartment Therapy
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