If you are a buyer in the competitive Spokane market, you must know the four major mistakes currently being made in a bidding war.
Without knowing this critical information in our highly competitive market, you will find yourself missing out time and time again on homes you love and left feeling emotionally exhausted and defeated. So to keep your buying journey enjoyable and successful, stay to the end for mistake #1.
If you don’t know me, I am Desiree Renshaw, a trusted Realtor helping Buyers, Sellers, and Investors ENJOY reaching their real estate goals in Spokane, WA.
Submitting an offer blind before your Realtor ever speaks to the listing agent and discovers the seller’s unique needs. I mean, we all need the same things, right!? No! For example, some sellers might need a specific closing date. Maybe they, too, need to find a home to buy or use their sale in a 1031 exchange. What if they prefer a quick closing with a rent back option allowing them to have the funds from their sale to buy a new home and not move twice. Would you know how to accommodate that without your Realtor speaking to the listing agent? I don’t think so. However, make sure to talk with your Realtor about the risks of offering a rent back.
Price! Do not let the listing price guide you on what to offer. Time and time again, I hear the statement, “no way, you think it will escalate that much over the list price?” ABSOLUTELY. Remember, a listing price is a number that a listing agent and seller agreed upon for their own reasons. Maybe they priced it low because they wanted to encourage a bidding war, or the listing agent isn’t as familiar with that area and unintentionally priced it too low. Instead, decide on a price by checking comps, call on pending properties to see where they escalated to, make your own calculations on how quickly prices are rising, and use those facts to decide on your offer price with your Realtor.
Not fully understanding the low appraisal addendum, how it can make your offer stand out, and how it works. Sellers want to GUARANTEE that the agreed-upon purchase price is the price they get at the closing table – regardless of what an appraiser says their home is worth. So this addendum is crucial to them. They want to know that a buyer will not renegotiate the price after the appraisal. The bigger the number on the addendum, the stronger the offer. Believe me, I understand all of the concerns that come to mind with this addendum. However, the upside for buyers is that it does allow you to compete with cash offers. Not everyone is in a position to include this addendum but discuss this in length with your Realtor and lender to ensure that you cannot because sometimes adjusting your downpayment alone will allow you to include this addendum. Make sure you fully understand how this addendum works, if you can include it, and how to structure it best for your specific situation.
Working with the wrong lender. Holy smokes, I can not emphasize this enough. Do not choose your lender simply because you THINK they offer the lowest interest rate. It is wild how much a lender can make or break your deal. Do you think you can do a two-week closing with financing, a home inspection, and an appraisal? Heck yes, you can! If a quick closing is essential to a seller, you want to be able to accommodate that, and this will also help you compete with cash. How about being able to waive your financing contingency. Make sure your Realtor and lender are aggressive and smart enough with the financing and closing timelines AND keep you and your earnest money safe. There is a strategy to this. Make sure your lender can execute.
Okay, remember that bidding wars can be stressful, and it isn’t about winning. It is about finding you the home that matches your dreams and keeping you financially intact. Ensure that you are working with a knowledgeable team about the market, the forms, and how to strategize effectively and safely.