It’s a familiar scenario: you find a house you really like, you make an offer, and you look forward to hearing back from the owner. You expect that the owner will either accept the offer or ask for a revised offer. But, instead, you find out that a new, higher offer has been placed on the table. All of a sudden, you’ve been unexpectedly thrust into a bidding war for your dream house. This isn’t an uncommon situation, particularly in competitive real estate markets such as Seattle and Bellevue. What do you do in this situation? If you’re thrown into this type of scenario, you may be a bit perplexed as to how to handle it. Based on what I’ve seen, I’ve come up with a few tips which can help hopeful buyers navigate through a bidding war.
Keep a Cool Head
It may sound a bit cliched, but one of the most important things you should do in this scenario is stay calm and keep a cool head. No matter what you ultimately decide to do, you can’t make good decisions if you’re not level headed. Being unexpectedly tossed into a bidding war can often produce negative reactions. Many people become worried, for instance, about the possibility of “losing,” and this sense of worry then starts to overshadow their overall decision-making process. You shouldn’t think of a bidding war as something which involves winning and losing, but instead something which involves finding out whether a house is truly a good fit for you. If you don’t end up buying the house, this doesn’t mean you’ve “lost,” it just means that you didn’t have a strong enough desire to offer more. It wasn’t a good fit.
Go After What You Want
If you keep a cool head, you’ll be able to make the best decision for you in any given bidding war. And, sometimes, this may mean that you need to increase your offer. Again, it all comes back to figuring out whether the house is truly a good fit for you, whether it’s something you really want. If you really want a certain house, for whatever reason, don’t be shy about going after it. This is what sparked the bidding war in the first place: someone else stepped up and was willing to make another offer. That person really wanted the house. If you feel the same, then you shouldn’t be afraid to plunk down more money.
Keep Other Options Open
A bidding war is similar to any other type of negotiation. In any negotiation, having other options increases your bargaining power. The reason for this is that having other options places a certain “ceiling” or maximum on what you’re willing to offer. And having a ceiling can be useful because it prevents you from getting carried away and spending far more than what a given asset is worth. Often, bidding wars become a matter of “pride,” or take on a more competitive tone than they should. Keeping other options available will help you stay grounded and remind you that this isn’t the only house on the market. While you might really want this particular place, you need other options for reference. Do you want to pay 10% more than the original price? 20%? Having alternatives can help you know when to draw the line.
Don’t Be Afraid to Walk Away
This is the counterpoint to tip #2. As much as it’s important to go after what you want, equally important is the ability to walk away from a less-than-ideal situation. If you decide that the price has risen too high, or realize that the property isn’t as spectacular as you originally thought, walk away. The real estate market is a funny thing. While it’s true that a few people can “blow the deal of a lifetime” or suffer from walking away from a certain deal, in the majority of cases there’s other good options on the market to choose from. Don’t let ego or stubbornness cause you to lock yourself into something which would be better off leaving alone.
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