What To Do During A Bidding War
This article is not about a bidding war at an auction, but for a standard house - where each time you go back with an offer the estate agent says another interested party has also increased their offer. How do you handle this situation when it occurs, which luckily isn't too often in most markets (though it can be fairly common in London or places where there is high demand and low availability of housing)?
The first thing to do is not to panic. Although it can be quite a stressful situation, particularly if you really have your heart set on a property only to then know there is at least one other interested party, and be in the situation where the seller (who is usually, but not always, simply looking for the most money) effectively plays the interested parties, including you, off against each other in order to secure the best price.
Although it makes sense they do this to get the best possible return, it can be tricky and emotionally difficult to stay level-headed through the process. Difficult, but not impossible.
What you need to do is be sure not to get carried away. With some people, it instantly turns into a competition to secure the house, and for a competitive person in the heat of the moment all that matters is to get what they want, no matter what the price.
As a result of this, it is not actually that uncommon for someone who bids the highest to pull out a few days later once the dust has settled and they realised that they went over the top, as all they could see was the winning line, and price went out the window.
Therefore try not to make this mistake. Set your top price, and irrespective of other purchasers do not go higher than you were initially prepared to go before you knew that there was competition. After all, having competition doesn't change anything about the house, so your assessment as to its value hasn't changed, so you shouldn't amend it just because others are going for the property. Even if you really want something, you shouldn't be prepared to pay over the odds, so just keep your cool, and if you don't get it, be philosophical about it.
Some estate agents would suggest going to sealed bids, particularly if two or more parties have offered the asking price, or very close to it. Here you simply send in your best offer by a certain date, and the vendor then chooses who to go with - and of course they don't always pick the buyer who has offered the most... remember if you have no chain, which as a first time buyer is the case, then that can make you a lot more attractive than someone who is part of a chain, so don't think about price alone: there are some other factors that are taken into account by the vendor too. Be prepared to state your case in order to give yourself as good a chance as possible to secure that first property for yourself.
More first-time house buying articles:
- Why Buying in London is Different to Elsewhere
- Fixed Or Variable Rate Mortgages
- Finding Recent Sale Prices in the Area
- Finding a Property & Location
- How To Deal With a Bad Landlord