Bidding War, Schmidding War…GET OVER IT!
It’s October 2020 and I just listed a small property – an adorable 3 bedroom split level, a mere 1550 square feet, comes with an open kitchen & a main bedroom w/ only a half-bath en-suite. Busy street aside, this house comes on the market at $479,000. 1 week and 7 offers later…BOOM, Bidding war! We have accepted a contract selling this house for $525,000, a 110% list:sale price ratio in a town that averages a list:sale ratio of 101%. This town, while it doesn’t have a train station, being just a mere 14 miles west of New York City, has been a target of the Covid-fueled millennial exodus from the City, and this town looks affordable & adorable – well-regarded schools, taxes that don’t completely break the bank and well-groomed neighborhoods that paint a picture of a lifestyle families can aspire to.
I am the listing agent, not the buyer’s agent in this case, and I will tell you there is NOTHING more satisfying than making that phone call to the agent that wrote the winning offer…”…what? Omg, wonderful…my clients are going to be over the moon…they’ve lost 4 houses already and I think they just couldn’t take another no…yes, they have a baby due in March and they just really need to be settled…” On the flip side, there is nothing worse than the other 6 calls that follow…” no, I am so sorry but the Seller’s went in another direction…well, yes it was price and terms…but we really appreciate the offer and of course I will hold onto it should anything happen with the current transaction…once again, so sorry…”
It hurts because you know those 6 other buyers have ALSO lost 3 houses already and are emotionally drained and will be devastated yet again. And as the Buyer Agent, you just keep shaking your head in disbelief – “…but we went $35K over and still didn’t win?”
Yes, it did. And No, you didn’t. This is the market of the moment in many towns and cities across America – it’s not just a question of lack of inventory, it is a LACK OF AFFORDABLE INVENTORY that has all of us spinning our wheels and gasping when we see the closing prices. Look at the 365-day market analysis of the town we are talking about – 365 days ago, the median sales price in town for single-family homes was $516K – in the last 90 days, it has risen by 11% to $574K.
As Buyer Agents, we are still playing catch up – we are looking at comparables that are 2 months behind the market, and honestly, we aren’t as good at financial adaptation as we would like – we struggle to talk to our clients honestly about the direction of the market and the price increases we are seeing. And we are reluctant to be the one to break it to them about just how HIGH they have to go to win the house. Perhaps we are afraid they will walk from us, the house, the market altogether. Or perhaps we are hesitant to encourage our clients to write that “atomic offer” that wins (what if they need to sell in the next 3 years and you can’t get that number again because the market has shifted? What if they get transferred next month? What if she has twins and they outgrow this house next year? What if? What if? WHAT IF!?!?)
And so what if that happens? Is it the end of the world?
No. Because you can only help a Buyer solve their housing needs of the moment, and a family of 4 living in a 2 bedroom apartment in Queens, paying $3200/month in rent should really buy a home. It’s time, and it’s ok. You have to trust that they are thinking individuals and can evaluate their own risk and reward thresholds for owning a home. If they target a town of their choosing, and it has limited inventory due to a non-elastic market, they have to decide for themselves if they will choose to make that 110% offer and definitively beat out other potential buyers for the home of their choosing. And as a Buyer Agent, you have to stop being incredulous at the prices you see – clearly, this is the new normal if you see it consistently performing high, and it’s time for you to incorporate these new numbers into your offer repertoire.
Because if your Buyer client tells you this is what they want, to live in THIS house in THIS town, then it’s your job to present the unbiased numbers, and let them make their own decisions. After that, you just have to package it up professionally so the Seller can feel confident in your ability to carry the transaction all the way through to the closing table.
Present the facts. Do not be afraid to show them the true numbers. Don’t allow your incredulity to affect your client’s rational decision-making process. Present the most professional offer. Congratulations on selling that house with the 7 offer bidding war…