I represented buyers in two intense bidding wars this past week, both of which went significantly over asking. In both cases, my buyers were disciplined. They were willing to let the houses go when it came to paying too much or giving away too much in contingencies. Ultimately, you've got to know when to walk away and have the confidence to do so.
Understanding valuation is the key to having confidence in these sort of negotiations. It can be tricky with certain types of property - especially when comparables are thin to none.
Won the Bidding War, Lost the DEAL
Take a moment to think about the mindset of buyers making decisions under intense pressure. In my last listing, there were multiple offers coming in so I intentionally slowed down the process, communicated clearly to all interested parties, and encouraged second (if not third) showings. That deal is through inspection and appraisal. It's headed to closing.
As for this week's bidding wars - it won't surprise us to see the houses come back to market. If so, my buyers may take a second look but in general, it sucks for the seller when buyer's remorse takes hold and a deal falls apart. It's also much more likely when a buyer felt rushed.
Why is this bad for the seller? Let's face it, property that has been under contract and returned to market is tainted. Not only did the seller lose valuable marketing time and incur very real holding costs, future buyers always want to know what's wrong with it. Rather than feeling a sense of scarcity (and mild urgency), if feels like they're sifting through the returned goods bin at a department store.
Sing it Kenny.
You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
Know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done
- Kenny Rogers, "The Gambler."
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