Real Estate Bidding Wars
Article by Heather Chilvers, Coldwell Banker Bermuda Realty
Real Estate bidding wars in Bermuda? Really? With a large number of cash buyers, a property that is attractively priced can engage a number of interested parties quickly in the current market. In this scenario the interested parties will all have to submit their best offers – effectively entering a bidding war. Is this always the case? What should buyers do to prepare themselves in case the next house they set their sights on goes to a bidding war?
Whilst Real Estate bidding wars can be an advantage to sellers, they often leave buyers frustrated and disappointed. War, can erupt almost as soon as an attractive home hits the market in neighborhoods with strong demand and low supply, if the property is priced at market value. What happens next thrusts the seller into the line of fire, as frenzied buyers pull out the stops in an effort to be the last one standing.
The first rumblings occur when the house is being viewed almost nonstop within the first week of listing. If your Agent tells you this, they are not being pushy they are preparing you for what could be a stressful couple of weeks ahead. They are informing you that this one will sell quickly, so that you are aware that if you do make an offer, it will have to be a good one with the necessary financial documents to support the offer.
The process goes like this : Sometimes two, but usually more buyers present offers for the same home. The offers are submitted to the listing agent and the listing agent presents them to the seller. All offers have to be in writing and all offers have to be submitted to the seller. Sometimes in this scenario all offers are presented to the seller together. This gives each buyer a fair chance, and it makes it easy for sellers to compare the terms of the offers. The full-scale bidding war breaks out when there's no clear winner. In these instances, the sellers ask the buyers to sweeten the deal. Buyers are then given the option to come back with better offers, but usually encourage buyers to give it ‘their best shot’. Make no mistake it is verystressful for everyone concerned.
If you're planning to buy a home in an area where there's high demand, preparing early can give you an edge. It's imperative that you get your finances -- and financing -- in order before you start looking at homes. Have your loan preapproval in hand for your first appointment with a real estate agent. Proof of funds can help, too. Proof of funds includes bank and investment statements showing you have access to enough cash to pay the deposit and closing costs.
Buyers likely to wind up in a bidding war should structure their offers to make the sale as quick and easy as possible for the seller. Sellers should evaluate multiple offers with an eye on the big picture. Although the purchase price is certainly important, money is not the only motivating factor, often the cleanest offer (i.e. no contingencies) wins. A buyer who has the home inspected before making the offer can offer to buy as-is. Similarly, a pre-offer appraisal may eliminate the need to make the sale contingent on the home appraising for a certain amount. The buyer might also offer a quick closing, if the seller is in a hurry, or allow the seller to remain in the home after closing if she needs more time.
The bottom line here is don’t be fooled by people saying our current market in Bermuda is soft. There are well heeled buyers in the marketplace at the moment. If a really desirable property (in any price range) comes onto the market at the correct price, be prepared to do battle if you want it to be yours. If you really want something don’t be afraid to go after it, it will hold its value long after the price is forgotten. Paying an extra $20,000 for something you are going to own for 20 years, translates into a cost of under $100 a month. Is it worth losing something you love for that little? I do have buyers who absolutely do not want to get into a bidding war, as it is very stressful.
Sellers should also be aware, that if they are not receiving showings or offers on their property, it is almost without doubt because the price is too high. Sometimes, pricing your home at or just below market value can result in a bidding war that ultimately drives the price up and over, the amount you would have otherwise received.
Heather Chilvers is amongst Coldwell Banker Bermuda Realty’s Leading Sales Agents. She has been working in Real Estate for nearly 30 years. Follow ‘Heather Realtor Bermuda’ on Facebook, and ‘@heatherrealtorbermuda’ on Instagram.
If you have a question for Heather, please contact her at firstname.lastname@example.org or 332 1793. All questions will be treated confidentially.