As early as April this year, the Wall Street Journal reported that competitive biddings are back with many home buyers increasingly competing for the same house.
The Wall Street Journal noted that these latest bidding wars are different from the competitive biddings during the housing boom.
“Competitive bidding in the current environment isn’t producing huge price increases or leaving sellers with hefty profits, as occurred during the housing boom,” the Wall Street Journal reported.
The Wall Street Journal added that these bidding wars are a result of supply shortages, not surging sales.
The National Association of Realtors (NAR) reported that in the second quarter of this year, there was an improvement in home prices but lack of inventory – particularly in the lower price ranges.
Lawrence Yun, NAR chief economist, said in a statement, “Some of the improvement in prices is due to a smaller share of sales in low price ranges where inventory is tight.”
In June this year, the Maryland Association of Realtors (MAR) reported a similar scenario: improvement in home prices and decrease in inventory. According to MAR, as of June 2012, there were 28,247 housing units in Maryland’s active inventory, a decrease from last year’s 38,464 active inventory.
So, how can one succeed in these bidding wars? Here are key tips to succeed in a competitive home bidding environment:
.Research. Once you find the home that meets your requirements, find out the average price of comparable homes sold recently in the area. From this average home price, make your offer accordingly. In the absence of this available data, you may lose your ideal home.
.Get ready with your financing. If you want to finance your home from gift money, have this money deposited in your bank account.
.Put down a big money deposit. “I see earnest money deposits as high as 20- percent of the purchase price,” Holly Worthington, a multiple-offer expert, told CNN Money.
.Write a compelling letter to the seller. Especially in cases where almost all things are equal, a compelling letter to the seller can be your key to winning the bid to that home that meets your requirements.
.Most importantly, hire a competent and experienced real estate agent.