If you are buying a home in Nashville right now chances are you may run into the infamous bidding war. Our namesake, Athena, is the goddess of war strategy, so this topic is right up our alley! Here are our rules for making the most of this stressful situation and winning out the war for the property of your dreams. If you are a first time home buyer, looking under the $300K mark, or want a deal, then a bidding war is almost guaranteed for your future and you need this list!
Step 1: Understand the Playing Field and Market
The first thing you should do before even looking at a property is get with your Southern Athena real estate agent to fully understand the market. This summer’s housing market has been insane. Freddie Mac even made it official: Nashville is nation’s strongest housing market. Read that again, it says in the NATION! So needless to say, buying in Nashville is going to be tough, no matter what price point or area you are looking. Especially if you are not armed and ready for battle with information.
Your Southern Athena agent will run sales reports and data for your areas of interest and Comparable Sales (Comps) for any specific property of interest. We look specifically at pricing in 4 categories of data and glean information from each: Active Listings, Under Contract Listings, Sold Listings, and Withdrawn Listings. These reports all hold clues for what Sellers expect. They have also often been provided to the Seller before listing. Why wouldn’t you also want to use this information to your advantage?
Understanding the market will save you tons of wasted time, and allow you to negotiate a winning scenario for your goals instead of preparing losing bid, after losing bid, and so on. This summer we have run into 15 way bidding wars and have had buyer’s lose on offers $40k above list price. With all time low interest rates, it’s a great time to buy. Too bad the competition is cutthroat. In today’s market, you have to suit up!
Step 2: Find Out the Seller’s Needs
Once you understand the market information and what the Seller is looking for, you need to get property specific. The more you know about what the Seller wants, the better. Each seller and buyer we work with has different priorities. Offering a winning bid is often determined by how many items match up with those priorities. Do they want a fast sale? Top dollar? Ease of transaction? Mind fixing things? Have a family member in the military? and so on and so on. Your agent should ask as many questions about the Seller’s dream offer as they can. Then when you prepare your offer, it will be the obvious choice because you have already given them exactly what they want.
Below are the basic components of an offer that will have an impact on if you win or lose the bidding war. Generally speaking, seller priorities will weigh out in order of importance as listed below starting with price:
- Title & Closing Costs
- Inspections and Repairs
- Earnest Money
- Special Stipulations
Learning From Our Past Mistakes: Having a veteran agent is paramount in high stakes real estate situations like bidding wars. Unfortunately, often the best wisdom comes from past experience. One time we lost a bidding war simply because we didn’t call the listing agent after 9 pm, and they hadn’t checked their email. Say What!? Never again. Now we call every time, and usually on multiple occasions. Plus we do our best to play well with our real estate colleagues and get the inside scoop. Sugar and spice, with everything nice y’all!
Step 3: Weighing Out Your Highest and Best Offer
You know it is a Seller’s market right? That means the Seller will have the upper hand in negotiations because the competition is so fierce. Sometimes, you will lose a bidding war and there was nothing you could do about it. Many buyers are coming from out of state and will be able to compete in ways that you may not. Cash offers, zero contingencies, quick close, and even down payment variables may come up in competing bids, and win. Other times, even if you win, the Sellers will have back up offers waiting in the wings, making negotiations even more fierce while you are under contract. Rest assured though, whether you are relocating here or a long time resident, we always stand by YOU and your needs. We want you to feel good about your bid and your purchase.
There are generally two types of Buyers in a bidding war. Those that play into the madness and those that stay objective. We encourage the latter. If a bidding war does ensue, you should receive formal written notice via a Multiple Offer Disclosure and Notification Form and will often be asked to submit your “highest and best” by a certain time frame. Now is the time to really think about what you can do and where you are comfortable walking away.
REAL ESTATE ETHICS:
- Did you know, it is unethical for the listing agent to disclose competing offers and rig the bidding war in someone’s favor? If this happens, talk with your Southern Athena agent about what you can and can’t do to protect your interests.
- Agents can SCAM you by saying there is a bidding war when there is not. A red flag for this is not giving proper written notice. Your agent should ensure a proper paper trail on your behalf before you put in your highest and best bid. There is little to no recourse for you after the fact if it was a lie.
- If you are Buying, and your real estate agent suggests adding language that covers an “Appraisal Shortfall”, find another agent! You would be paying above market price for a home that has been proven to be valued at less than what you are paying. This is the first summer we have experienced agents telling their buyers to do this and think it is whack – a bad deal all the way around. You would start out day one underwater on your new home.
Things to consider in depth for your highest and best. At what point to do you feel you are still excited about the purchase versus feel like you are getting had? If a client is over bidding, we often ask, “At what price point would you be disappointed knowing someone else came in $1,000 higher, and at what point would you feel like you were overpaying and we could find something else?” How long have we been looking and bidding? Was highest price your main priority on your Southern Athena Real Estate Wishlist? How does this property and bid align with your real estate goals, and priorities? How does it compare to past properties toured?
We hate it when the stress of the situation makes people lose objectivity. So we stay diligent about upholding your wants and needs. We want to help you weigh your options and put your best offer forward without regret. We will prod you with questions about what you want, provide information about what we know, and work through the offer until everyone feels like it is a winner. And then we cross our fingers, say some “hail mary’s,” and toss and turn all night while we wait for the Seller’s response.
Step 4: Add A Personal Touch – It’s a Southern Thing
Sometimes, all it takes is a personal touch to win a bidding war. You do know that there is another party on the other end of that table right? A living breathing person with values, feelings, and very often more in common with you than you could imagine. In any bidding war, adding a personal touch can be just the trick to make a Seller choose your offer over another (even better offers!). Contrary to what the media tells us, not everyone’s prime motivation is money. Many people care deeply about their family, church, community, architecture, pets, and everything else that makes Nashville so great.
We take a little extra time on the front end of your search to write a letter on your behalf. If we feel the Seller might be interested in your story, we customize it to them so they know just how much you want their home. We highlight aspects of their home you love, ways you may relate, and reiterate how serious and intent you are on making the purchase happen. At this point in the game, the Sellers know you are all in with your highest and best. You might as well put all of your good cards on the table and butter them up while you are at it. Babies, puppies, and kittens can sell anything ya know.
Step 5: Celebrate Your Success!
Ha! We had to put this step in here. Always celebrate the small victories. You are not to closing yet, but let’s pop some bottles anyway. Enjoying the journey with all of it’s ups and downs, is half of the fun. Roller coasters are a blast right!? Take comfort that others are in the same boat, that real estate is an investment in your future, and that your Southern Athena Agent is along for the ride with you, through thick and thin, good and bad. We love real estate success and hope this article helps you win out your next bidding war.
Want even more information on our Home Buying process? You may like our Step by Step Guide for Buying a Home in Nashville.
Have any additional questions or insights? Drop us a line! We love hearing stories from both sellers and buyers in the Nashville market.