If you’ve been planning on buying a home, there’s a good chance you were hoping that the good news about higher interest rates would be that there would at least be fewer bidding wars.
But despite rates and the economy edging some buyers out of the market — and others just deciding to take a break from searching for a house — there’s a good chance you’re not feeling like the market has bid farewell to bidding wars at all.
According to Yahoo Finance, bidding wars are still very much a thing in 2024, with some houses receiving upwards of 30 offers.
So it’s completely understandable if you’re starting to wonder if bidding wars are the new normal, and are just something buyers will have to deal with forever at this point.
While They May Feel like the New Normal, They’re Not a New Thing
Real estate is driven in large part by supply and demand. And, for quite some time now, there simply have not been enough houses for sale to satisfy the number of buyers competing for them, which has been the reason bidding wars have continued even after rates went up.
However, supply and demand isn’t the only thing that causes bidding wars. They can occur even in a “buyers’ market” where there are more houses for sale than there are buyers looking for a home.
It doesn’t matter if it’s a recession, depression, or the best economic period ever; if a seller prices their house appropriately for the current market conditions, and there’s more than one buyer looking in the area and price range that house is in, there’s a good chance there will be a bidding war.
In other words, they’re something you always need to be prepared for and expect.
3 Key Strategies for Buyers Who Might Have to Compete in a Bidding War
Whether you’re in a market where bidding wars are the norm or not, it pays to be prepared and ready to compete. Here are 5 things you should do to increase your odds of success if you’re competing against multiple offers:
– Be ready to prove you can pay the price. If you’ll need to obtain a mortgage to complete the purchase, have a recent pre-approval from a reputable lender ready at all times. If you’ll be paying cash, make sure you have bank records to prove you have the money accessible.
– Don’t let a listing linger. Go see any house that you have interest in as soon as possible, and if you like it, put an offer in writing as soon as possible. It may not help you avoid a bidding war, but it’ll ensure you’re in the mix, and show the owners and their agent that you’re a serious and interested buyer.
Make a strong, competitive offer that you’re comfortable with. Just because there’s a bidding war, that doesn’t necessarily mean a house will sell for over the asking price, but there’s always a chance. Be prepared to offer your best and final offer if and when the owner and their agent ask for it, based upon what you feel the house is worth, and how much you feel comfortable paying. Also try to keep your contingencies to a minimum, without taking on more risk than you’re comfortable with.
Bidding wars have become increasingly prevalent in many areas and price ranges, defying the expectation that rising interest rates would take competition (and possibly even prices) down a notch for buyers.
While bidding wars may seem like the new normal, they’re not a recent phenomenon. Dealing with a bidding war is always a possibility in any market (if a house is priced appropriately), so buyers should always be prepared and act quickly.
However, exploring areas with more supply, targeting overpriced homes, or looking in less in-demand price ranges may be a possible solution for those seeking to avoid bidding wars altogether.
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