Bidding wars happen all the time, but 2020 has been a particularly tough year for buyers. Reluctance to sell during a pandemic combined with historically low interest rates has generated a low-inventory, high-demand market. So far this year, 42% of buyers have experienced a multiple-offer scenario.
To help you go to battle for your clients, we enlisted the help of two agents who are on the front lines of bidding wars every day. Leslie McLeroy (Angie Cody Team in Knoxville, TN) and Matt Richling (RE/MAX Hallmark Realty Group in Ottawa, ON) joined Realvolve + Firepoint's Valerie Garcia and Gabe Cordova for an insightful webinar to share their best strategies for tackling multiple-offer situations. Keep reading for a quick recap, or you can watch the full webinar recording on our website!
9 Strategies for Tackling (and Winning!) In Multiple-Offer Scenarios
This strategy is more about laying the groundwork. When you build up a vast network of contacts, there's a good chance the listing agent in a multiple-offer situation is someone you know, which could give you an advantage.
"I try very hard to network with our local realtor community, at events and stuff like that," said Leslie. "I'm a member of Women's Council. I try to really put myself out there, so when I call this agent, hopefully it's somebody I know so I can say, 'Hey, it's Leslie. Why don't you be nice to me? Give me the skinny.'"
2) Set realistic expectations with your client.
If you know your buyer is heading into a competitive market, let them know during that initial conversation that they are likely to experience multiple-offer situations. Explain that this is not the time to get a bargain, that any home they find will likely sell for over the asking price, and that they'll need to move quickly once they find a house they love.
3) Let your client experience a loss.
If you're having a hard time getting your client to accept the realities of a competitive seller's market, you might just have to let them experience a loss.
Leslie spoke from experience: "So my client will say, 'I feel better just offering full price. I don't want to go above.' And I'll say, 'Okay, well, we're likely not going to get it, but we're going to try our best and we're going to write up this offer,' and they don't get it, of course. And then the next time, they're a little bit more aggressive, and the next time they're listening to me, and then we're at the closing table."
4) Ask the listing agent what the ideal offer would look like.
One of Matt's most effective strategies is pretty simple—he just asks the listing agent a simple question: What do you want? How can we be competitive?
"We had one deal where the listing agent had a list of things we could do to make our offer better," Matt said. "And they came to us after and said, 'Well, no one else listened to our requests.' And in that case, what they wanted was a love letter. So we did it, and we were the only one to do it. So we ended up winning."
You never know what you might learn about the sellers. They might be simply looking for the highest price, but perhaps there are other factors that would sway their decision, such as needing more time before closing.
5) Use an escalation clause.
Leslie will sometimes include an escalation clause, which basically says, "This is my offer, but if you receive a competing offer, I'm willing to increase my offer to X price." This eliminates the need for a counteroffer, but it's only legal in some states.
6) Leverage video (and your lender).
One of Leslie's brilliant strategies is to have her lender create a video in which he talks about the borrower/buyer and makes the case for why they're a great candidate for the mortgage and the property. Then he sends the video message (via BombBomb) to the listing agent.
7) Send a love letter.
Matt is a big advocate of sending a love letter along with an offer. In Canada, there are less restrictions on what can be included in a letter. Leslie, on the other hand, is a little more wary about having her clients write love letters—she makes them keep out personal information and keeps the focus strictly on the home. Be sure to read up on your state's rules.
8) When your client is ready to make an offer, call the listing agent immediately.
Leslie says her number one mistake to avoid is waiting too long before reaching out to the listing agent: "If you've just visited a property and your client is ready to submit an offer, do not wait until you get home to start popping up an offer. It's dangerous because the sellers may already have 20 more and may be getting ready to close the gate. When I get in the car, literally before I even put the car in drive, I'm calling the listing agent: 'I'm sending you an offer.' And then I'll get home really quick and get it written up. Yeah, so don't wait. You need to be on the phone with them immediately when you leave the property."
9) Move on quickly after a loss.
"When a buyer loses an offer," Matt said, "it’s like the whole world just shattered in front of them. So they need your support. The quicker you can get over a loss and get back into the home search, the happier your buyers are going to be."
Want more strategies for bidding wars? Download the ebook!
- How to prepare your buyers for the battle ahead
- Tips and tricks for getting your offer noticed
- Why you should learn to speak the seller's language
- And more!
Learn from agents who have experienced plenty of time on the front lines of bidding wars. Download the ebook today!