Bidding war tactics for 2021 home sales are like nothing we have ever experienced before. Currently, we are in an extreme Seller’s market, with not nearly enough homes to purchase to meet the pent-up demand. Lumber prices are up over 400%, preventing enough affordable new homes from being built to fill the void. For this reason, many things come into play we have not encountered before. Let’s take a look at some of the bidding war tactics being used by the best Buyer Agents and top Listing Agents to negotiate offers in 2021.
Bidding War Tactics for Buyers
If there are multiple offers on a home, you can increase your offered purchase price in order not to be outbid. Language in the clause might say that the Buyer is willing to offer $5,000 over the highest offer, not to exceed a certain dollar amount. To be different and make your offer stand out, try using an odd amount as the price increase, such as $1500, $2500, or $5500. A savvy Buyer Agent will also ask for proof of the other offers, and write that into the terms. Sellers are not obligated to accept the highest dollar amount. They may choose any offer that they wish.
Make an On-Camera Appeal
Chances are that you are being watched, if you notice cameras in a home. A great Buyer Agent will ask the Buyers to speak directly to the Sellers as if they are in the room. Buyers should let the Homeowners know how much they love their house and why. This is an opportunity to give a virtual love letter to the Homeowners. They will be able to see and hear your enthusiasm for their home. If they are not watching in real time, you can bet that they will be playing it back later.
Have the Lender Call the Listing Agent
A call reassuring the Listing Agent that the Buyers are credit-worthy, and a good risk to get to the closing table without any anticipated problems, might be just the thing to help a Seller choose your offer over another.
Have the Broker Call the Listing Agent
When a Broker calls the Listing Agent to give their Buyer Agent a rave review, that can be impressive.
Real estate is a small world, and communication is key to a smooth transaction. Rapport built between all parties can be a win-win for everyone.
Offer the Best Terms for the Seller
A top Buyer’s Agent will call the Listing Agent and ASK what the Sellers specifically need to make a workable offer. The best terms always win, and that can mean different things for different people. Here are some more bidding war tactics that can add up to a winning offer:
- Make the Earnest Money Non-Refundable – This is not something everyone will want to do, or can afford to do, but would demonstrate serious intent. Our company has seen full-price checks written as Earnest Money, which is really a deposit on the home that is credited towards the purchase price.
- Offer to pay the Seller’s Closing Costs
- Pay the Termite Fees
- Offer to pay the pro-rated taxes
- Purchase the home AS IS with no repairs, but get a quick Home Inspection for investigative purposes only. Be aware that even an AS IS sale is not always AS IS. Health and Safety repairs will need to be addressed.
- Pay Cash – Those offers will go straight to the top, if the rest of the terms are favorable. In the end it will be about the bottom line for the Seller. If the Seller will net $25,000 more from a financed sale, they most likely will go with the highest net for them.
- Offer an appraisal gap when using a lender. If the home does not appraise for contract price or higher, Buyers pay the difference, guaranteeing that the Sellers will get contract price.
Bidding War Tactics for Sellers
Get a Leaseback Option
Sellers may have delays in moving to their next home for a number of reasons. A great Listing Agent may ask for up to a 60 day leaseback on a home after closing. (Lenders require occupancy by the 60th day.) This means that the Sellers may remain in the home for up to 60 days after the sale, to resolve any issues they might have in closing on their next home.
If a Seller is unable to find a place to move, then they may void the contract, and change their mind about selling. Sellers must return the Buyer’s Earnest Money, since the sale did not go through due to any fault of the Buyers.
Buyer Agents and Listing Agents are trying new bidding war tactics in this crazy 2021 market. Navigating contract negotiations without an experienced agent is almost impossible.
For your best chance at winning the bid in this Seller’s Market, or getting the terms a Seller needs to move to the next home, contact Shannon Holmes. I am your local expert in the Birmingham, Alabama real estate market, and look forward to working for you.
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