Navigating a Bidding War

As a seller, finding yourself in the midst of a bidding war might sound like a dream come true. Two or more parties trying to outbid one another as the price of your home climbs higher and higher—what could possibly go wrong?

But a bidding war can backfire on you if you're not careful, leaving you with nothing but wasted time and effort. Here's your seller's guide to navigating a bidding war so you come out on top.

What Is a Bidding War?

It's important to understand what a bidding war is and also what a bidding war isn't. A bidding war is when two prospective buyers are bidding higher and higher to purchase a property. This drives up the price of the property, which can be great for the seller. 

A situation in which two prospective buyers send in differing offers, one higher than the other, is not a bidding war. It simply means that you have multiple offers. The characteristic that defines a bidding war is active competition between the interested parties.

How Do You Handle a Bidding War?

The primary goal when you're selling your home is generally to get the highest possible price. A bidding war may be a great opportunity to accomplish this goal, but it's also important to be honest with your potential buyers and to remember that the highest offer isn't always the best offer. 

• Look Beyond the Numbers. There are times when it actually makes more sense to accept an offer other than the highest bid. Be sure to take other factors into account, such as the buyer's financial standing, credit score, and whether they have pre-approval for a mortgage.
  
  
• Consider Closing Dates. For most sellers, moving their home quickly is the second most important consideration after price. It may be worthwhile to accept a slightly lower offer if it means closing sooner. 
  
  
• Keep a Level Head. Seeing the offers go up and up can be exciting, but it's important not to let emotions get the better of you when you're navigating a bidding war. Staying level-headed is crucial to not blowing the deal. 

Should You Encourage a Bidding War?

It is possible to encourage a bidding war over your property, and there can be real advantages to doing so. While maintaining a good, transparent relationship with your buyers is a top priority, you can stack the deck in your favor to make a bidding war more likely.

• Set the Right Asking Price. Creating a situation in which a bidding war is possible starts with deciding on the perfect listing price. Generally speaking, a bidding war is most likely if your home is listed ever-so-slightly below market value. Just be careful not to list it too low, or you could be underselling yourself.
  
  
• Market Like a Pro. Great marketing will get the offers rolling in, which is the best way to encourage a potential bidding war. Create an irresistible listing with professional photographs and a virtual walk-through, and don't neglect social media.
  
  
• Never Fake a Bidding War. It's unethical to tell a buyer that you're entertaining other offers if that isn't really the case. Not only does this unfairly mislead the buyer, but it can also backfire if they become aware of the deception.

By playing your cards right, a bidding war can drive up the price of your home and increase your profit. Of course, to create the prime conditions that might lead to a bidding war, it helps to have a great team of real estate professionals working for you.

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