iowahomeloans

Bidding Wars are Back!

Posted on: May 17, 2013

With all of the favorable reports, media announcements and analysts’ predictions, the housing market has gone from stagnant to sizzling in many parts of the country. For-sale listings are drawing offers from a large number of house hunters, with a significant percentage of those resulting in multiple offers. And what do multiple offers mean? Bidding wars!

 

Housing Markets Around the Country are Experiencing Bidding Wars

Bidding wars aren’t just occurring in a few select housing markets. Depending on where you live, anywhere from 67% to 90% of properties may be subject to multiple offers – which frequently drive up the price.

 

Major metropolitan areas, such as Boston, Washington D.C., Seattle and New York are generating bidding wars approximately 67% of the time. Some markets are up to 75% involved in bidding wars, while desirable places in California, such as San Francisco and Sacramento, are finding a whopping 90% of their properties closing on bidding wars. One property alone in a California subdivision received 62 separate bids. A set of two condo units in Cambridge, Massachusetts came up recently, and within two weeks, brokers had more than 250 bids on the properties.

 

The new reality is here – bidding wars are becoming more rule than exception.

 

How to Deal with a Bidding War

As a buyer, dealing with a bidding war can be very frustrating. There are a few rules of thumb that can help you navigate this tough market:

 

  • Know how much you can spend. You may have a very attractive offer, but the buyer may be holding out for a little more. Know whether you can keep bidding or whether you should bow out gracefully.
  • Lead with a good offer. Don’t lead with a low offer hoping to get a discount on the home. If you’re in a market subject to bidding wars, lead with an offer that’s at least the asking price – or maybe even above the asking price.
  • Do your research. Find out how comparable properties are selling. Are they coming in above the asking price? If so, how much higher? If you do your research, you know how much you have to come up and you can lead with an attractive offer.

 

Bidding wars don’t have to spell the end of your home-buying dream – just be prepared to keep looking, and lead strong. If you’re patient, you’ll eventually find the right deal.

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