Reader 3rd Gen SD asked yesterday,
“You regularly mention pricing to engineer a bidding war. Do you have a post you could link to that describes your strategy, including how you manage same?”
There are no rules or regulations on how to handle a bidding war – each realtor is on their own to devise a strategy. As a result, most don’t do more than spreading out the offers on the seller’s table and picking one.
Back in the REO days, the banks would insist on countering each bidder for their highest-and-best offer, and that is the most common solution. But agents are reluctant to tell bidders how many offers there are, or at what price point – they just want you to bid blindly. In those cases, at least every bidder has a chance to win, but without some guidance they are likely to be conservative.
When my sellers get multiple offers, I’m working the phones myself. I am asking questions to qualify each buyer, and giving their agent some coaching on what it will take to win.
It’s the pitting of each buyer against each other that results in top dollar sales. They are much more likely to pay a higher price if they have a number to shoot at – AND they feel like they have been treated fairly.
Here are specific examples of how I do it:
https://www.bubbleinfo.com/2013/12/15/how-jim-handles-bidding-wars/
https://www.bubbleinfo.com/2012/11/30/open-biddingtransparency-live/
https://www.bubbleinfo.com/2013/04/18/price-coaching-for-bidding-wars/
Why doesn’t every agent handle multiple offers this way? Because they don’t have to – sellers still think they did well, price-wise, and they can tell their friends and family that their house was sold in a bidding war.
Thinking of selling? Hire Jim the Realtor!
Here is more on agent responsibilities in bidding wars:
http://blogonlineed.com/?page_id=5158
Bidding wars are excellent price discovery mechanisms. Not everyone is as open and honest as our host JtR however. Watch to make sure when the seller agent says they have a higher bid that they actually have one in hand.
Thanks for the follow up, JtR. This was illuminating, and more than I asked for. Hope it serves others, too.
We were in a bidding war with roughly 15 others that Jim was able to win.
One thing I noticed was that in a bidding war the buyers agent needs to be highly organized and 100% on top of their game. Once you’ve made it to the final few anything could happen. When the seller has 3-4 offers within 10k of each other on a house that’s 500K+ all they’re are looking for is the offer that’s most likely to perform.
In our case the sellers agent was given a gift horse listing + they were very inexperienced. What got us over the top. (other than offer price) was Jim and his team being professional and basically doing all the listing agents work for them.
Net/Net…
Being professional + going above and beyond is how Jim was able to close our bidding war situation.
Thanks Shadash!
Most buyer-agents will send in their offer, and hope for the best. But if you leave the decision solely up to the listing agent, who knows what they might do! I like to help them with that!