In today’s competitive market, it’s not unusual for a home to get multiple offers. So, if you’re planning on buying a home, it’s important to understand how to navigate bidding wars.

So, what, exactly, do you need to know when you’re ready to make an offer on the house, but you’re not the only buyer that wants to call the home their own?

A recent article from realtor.com outlined key insights buyers need to know when they find themselves up against a bidding war, including:

• Make your first offer your best offer. When a home has multiple offers on the table, you generally only have one shot to grab the seller’s attention—so make sure that your first offer is your best offer. That means to make an offer at the upper limit of what you’re willing to pay and to include anything else you’re willing to make your offer more competitive (for example, waiving a contingency).
• Write a personal letter. When you’re up against multiple other offers, a heartfelt letter to the sellers about why you want to buy their home could help your offer stand out—and, if the rest of your offer is competitive, could give you the extra help you need to win the bidding war.

  However, these have been coming under scrutiny in many areas recently, so make sure they are still acceptable in your area before writing and submitting one. Make sure to have your agent guide you in what you can and can’t say in your letter if you are writing one to include with your offer.

• Know that the seller is in the driver’s seat. When you really want a home, it can be tempting to try to force or control the situation. But the truth is, in the case of a bidding war, it’s important to recognize that the sellers are in the driver’s seat—and accepting that all you can do is make your best offer and hope for the best can make the process less stressful.

Whether you sold a home in the past few years or not, you’re probably well aware that houses have been selling fast, with multiple offers, and over asking price.

But everyone also knows it can’t always be like that. The real estate market is cyclical, and we’ve seen a favorable market for sellers for quite a while now. So at some point it will likely shift in favor of buyers, at least to some degree. When? Nobody knows for sure. But it’ll start happening at some point, so it’s good to be aware of that and keep things in perspective if you’re thinking about selling in the near future.

There are so many different predictions about whether prices will fall, or just stabilize, but most theories are that prices won’t continue to rise. Buyer activity is projected to cool off due to rising interest rates, which could lead to less bidding wars, fewer offers, and ultimately lower offers for sellers.

Ideally the market won’t take a drastic hit for sellers. It will just cool off. This would be great for sellers and buyers alike. Sellers would get to benefit from the gains of recent years, while buyers would get some breathing room and the ability to make less rushed decisions without competing against multiple offers every single time.

People have gotten used to hearing that houses are selling in mere days, with multiple offers, and over asking every single time. But even if the market change isn’t drastic for sellers, there’s a chance you won’t experience what other sellers have over the past few years. Your expectations could be higher than they should be and cause you to worry more than you should and make poor decisions.

If your house is on the market now, or in the near future, prepare yourself to experience a few things:

• More days on the market. Your house may not sell in the first week or two.
• Price reductions. You may have to adjust your price down a bit if buyers aren’t making offers after a certain period of time.
• You may not get multiple offers. There might not be as many buyers fighting over your house as you might have seen in the recent past.

The Takeaway:

At some point the market may change more dramatically, but in the near future, you’re more likely to experience the above signs that things are changing. Does that mean you shouldn’t sell? Should you pull your house off the market and wait for things to get better? Should you fire your agent and find a different one? Not at all.

The chances are, you’ll still sell your house for more than it would’ve sold for a year or two ago, but it may take a little more time, and you might see less demand than you anticipated.
But it’s easy to get concerned that the market is “bad” all of a sudden, or think that your agent is doing something wrong, or not enough to get your house sold, when it could just be the market changing ever so slightly.

Expecting these subtle shifts, and keeping the bigger picture in perspective, will help you keep your cool when the market cools, and help you avoid making any costly mistakes.

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