- The Washington Times - Thursday, October 28, 2004

Looking for a good deal on a home? Join the crowd. Looking to get the best price for your existing home? There is a crowd for you to join as well. Low lending rates and fewer available homes have cultivated a market filled with com-

petition. Getting the edge on multiple offers provides a unique set of challenges and opportunities for both buyers and sellers.

For each group, success comes in recognizing bidding situations and adopting strategies for making the most of them.

Bidding wars are alive and well in the Washington-area real estate market, according to Boyd Campbell, managing partner and licensed real estate broker at Lanham-based Century 21 Home Center.

“There is a fairly significant pool of potential buyers who are ready, willing and able to purchase,” Mr. Campbell says.

This does not necessarily translate into an automatic multiple-offer advantage or windfall for sellers, though.

Mr. Campbell says a house that goes on the market on a Thursday afternoon may well generate a great deal of interest and a number of offers by the following Monday. However, the potential buyer who stands out in a crowded field of multiple offers might not necessarily be the one offering to pay the most.

So what is a seller really looking for, and how can a buyer get a jump on the competition?

While the buyer’s “best” offer likely meets or exceeds the asking price, Mr. Campbell says, sellers are also looking at the buyer’s financial ability and related terms and conditions.

The buyer who includes a preapproved or prequalified lender’s letter will stand out in a stack of offers that includes contingencies on getting financing or selling an existing home.

Also, the buyer who offers to make a large earnest-money deposit and down payment will be taken more seriously.

“If there are 10 offers, a buyer may have the best offer, but still not be the most qualified buyer,” says Ilene Kessler of RE/MAX Advantage Realty in Columbia.

Ms. Kessler says that to be competitive, buyers should not only be prequalified with a lender but preapproved for a loan.

“We encourage buyers to get all their ducks in a row,” Ms. Kessler says.

On the seller’s side, Ms. Kessler says, Realtors will often call lenders issuing the prequalification letters to check on the information provided, making sure proper credit checks were conducted and income verified.

The potential buyer will also do well to consider what they are willing and able to do to strengthen the seller’s bottom line.

Offering to reduce and absorb some of the costs associated with the transaction that are traditionally paid by the seller may provide the buyer a competitive advantage in a crowded field of multiple offers.

Ms. Kessler says she never recommends that buyers waive a home inspection. However, she says, in one instance she felt the buyers minimized the potential risks in forgoing a home inspection on a year-old home.

She says some buyers opt for an “informational” home inspection in which they have an opportunity to learn about the workings of a home. This gives the buyer a look around and some operational information, such as changing filters in the air conditioning system.

The buyer’s “laundry list” of repairs they want the seller to make could be a deal breaker, says Ms. Kessler, adding that the buyer should try to draw a distinction between “cosmetic” problems and more substantive structural concerns.

Mr. Campbell says that the fewer contingencies the better.

The seller is usually on the lookout for contingencies or requests that might serve to delay the transaction, increase the seller’s out-of-pocket expenses or represent a potential loophole for the buyer to walk away from the deal.

The buyer willing to accept a repair allowance and who will take on the responsibility of making needed repairs may have a stronger bargaining position than the buyer who makes the purchase contingent on the seller making the repairs.

Mr. Campbell and Ms. Kessler agree that there is a great deal of value as well for the buyer to understand any special or unique needs or considerations on the part of the seller.

Mr. Campbell says the seller’s timeline, more often than not, is an overriding consideration.

For example, the seller who wants to retain possession of the home so the children can finish out the school year or until the family is able to move into a new home will look more favorably on a buyer willing to work with them.

Ms. Kessler recommends asking upfront, “When would the seller like to be out of the house?”

Finally, she says, personalizing the experience for the seller can provide buyers a leg up when multiple offers are on the table.

A buyer who writes a letter to the seller explaining how much they like the house can make a difference when several buyers are offering the same price and terms, Ms. Kessler says.

She says she knows of a case in which such a letter included in the buyer’s offer packet was the deciding factor.

Experts also suggest that buyers and sellers are better positioned in bidding wars when they retain the services of a real estate agent who is “successful and well-known to other agents,” according to the trade publication Realty Times.

The question of whether Realtors work well together is one shared among Realtors themselves.

The National Association of Realtors Code of Ethics includes a Standard of Practice calling on Realtors to “submit offers and counter-offers objectively and as quickly as possible.”

M. Joseph Sirgy, a real estate research fellow at Virginia Tech, says a survey he conducted indicated that a majority of Realtors felt the offer and counter-offer standard was important, however, a majority also felt that “it doesn’t really happen.”

Still, short of taking real estate law classes and reading Sun Tzu’s “Art of War” for tips on strategy, the average buyer or seller will do well to find a Realtor who has experience in the local real estate market and a record of success in the bidding wars.

There should be ample opportunity for the buyer to ask questions and monitor progress. Some questions include:

• How will my offer be delivered to the seller, in person or by fax?

• How will I know if my offer has been received?

• How will I know when I need to reconsider and make another offer?

• How will I know it is time to throw in the towel, and it wasn’t meant to be?

Selecting the “right” Realtor is clearly an important decision at any time, but it would seem particularly important in situations involving multiple offers and bidding wars.

However, as Ms. Kessler notes, “ultimately the decision is between buyers and sellers.”

The best outcome is a win-win situation involving price and terms, in which the buyer gets the house he wants at a fair price and the seller gets the price and terms he wants.

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