So far this year, 42% of buyers have found themselves in a bidding war for a home. In more competitive markets, these numbers can be closer to 80% or 90%. How can you prepare your buyer clients for a bidding war, pick up the pieces after a loss, and eventually get them into their perfect home?
In a recent Realvolve + Firepoint webinar, two top real estate agents shared their advice for tackling multiple offer scenarios. Leslie McLeroy is a buyer's agent with the Angie Cody Team in Knoxville, Tennessee, and Matt Richling is an agent with the RE/MAX Hallmark Realty Group in Ottawa, Ontario.
Valerie Garcia and Gabe Cordova of Realvolve + Firepoint dug deep with questions to gain insight on these two agents' bidding war strategies. Read the recap below or watch the full webinar recording to learn how Leslie and Matthew tackle—and win!—multiple offer situations.
Leslie starts by recalibrating her clients' expectations:
Typically, when you're with a buyer, they have a price point in mind because they've been pre-approved. Let's say they've been pre-approved for 250,000. In my market, I know that we're not going to look at $250,000 houses. We need to come down to at least 220,000 because we need that extra money to leverage. Because, right out of the gate, it's going to go above what's priced. And so that's the first thing—I tell buyers, this is not a time where you're going to get a bargain. If you think you're going to get a bargain, it's not going to happen. So we need to recalibrate your expectations.
And then I tell them, you may not win every one, and it's okay. If you don't, we're just going to scale back and try it again. It's really important to set expectations upfront, because it can be extremely deflating, especially with a first-time homebuyer if they cannot get their offers accepted.
She admits there is a risk of discouraging them out of buying right now, but she counters that by reminding them that interest rates are at historic lows, that they're pre-approved, and that it really is a great time to buy.
Matt 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. 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.
He keeps the question open-ended:
We're just trying to get information from them. Sometimes, we learn that it's as simple as price. Sometimes, it's where do they expect it to be? Often, it's a question of can we bring a bully offer or a preemptive offer? Are you guys open to that? Okay, at what price does it need to be for us to get it accepted? It depends. Every scenario is a little bit different. And how chatty a listing agent is can make that easy or hard, but really, it's just trying to get more information about what they're looking for, just open-ended like that.
Leslie’s networking groundwork gives her an advantage in bidding wars:
I try very hard to network with our local realtor community, at events and stuff like that. 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."
I'm trying to do everything I can to leverage contacts I know. I've laid that groundwork for months and months and months and months in advance.
Leslie also uses escalation clauses to eliminate the need for a counteroffer, but those are only legal in some states. Some other things Leslie does to make her offer more attractive:
Low inspection days, non-refundable earnest money. I’ve tried to remove every contingency. I do use love letters. And I leverage the magic of video…that, for me, has been a sweet spot.
Leslie got her lender involved in the magic. Here is an example script of a video Leslie has her lender create and send to the listing agent:
Good afternoon, Mr. or Mrs. Listing Agent. Just wanted to take a second and introduce myself. My name is Bryan McKee with Movement Mortgage. I am working with Leslie with one of her fantastic buyers and they are very excited to put an offer in on 123 Main Street. I just wanted to take a moment and tell you a little bit about them so that you have something other than a piece of paper coming at you. Mr. and Mrs. Smith are an absolutely lovely young couple, recently married. They just moved into the area and they're very excited about the job opportunities here. And, from our view of things, they have excellent credit, very low debt to income ratio. Job history is incredibly stable. And most importantly, they're really an ideal client and we're super excited to help them through this process. If you have any questions, please do not hesitate to give me a call. My phone number is 865-223-4112, and I look forward to working with you with these clients. Talk to you soon.
It's just a simple, candid video shot on a cell phone. Leslie has found that the more authentic it is, the better it works. And when Gabe asked about the response she gets from the listing agents who receive these videos, her answer was an emphatic, "Oh, slam dunk. Slam dunk."
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.
I find that one of the most important mistakes to avoid is letting the buyer run with expectations before you're able to properly set them. For example, if you’re working with a younger couple and a parent or some other third party comes in, it’s so easy to let that third party run with expectations. But you want to keep control of that because you know the market. You know what’s going on.
When a buyer loses an offer, 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.
If it's a new buyer and you cannot get them to go above list price, just write up an offer and then lose. Because the truth is, sometimes they need to lose before they realize how this game works. And that's okay. Every loss is a learning experience. "What can we learn from this? And what are we going to do better next time?" And communicate that with your client.
That's what I'm doing—I'm being positive, but I'm being realistic. 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.
And if you're feeling frustrated, know that you're not alone. "It's hard not to get frustrated," Leslie said. "I mean, I'm tired. I'm sick of it. But you've just got to keep staying positive. Just keep going at it."
We've put together an ebook that contains tips and strategies from top agents on how to survive and win a bidding war! This 11-page ebook includes:
Learn from other agents who are on the front lines of bidding wars. Download the ebook today!
Sammy Harper is a content writer at Firepoint & Realvolve. Her nine years of digital marketing experience include SEO, email marketing, social media, and blogging. Fascinated by the real estate indust...Read More