You’ve found your ideal Beverly Hills home that features everything you could want and need. You’re imagining your new life there and are looking forward to moving in, but then you hear the dreaded words: “bidding war.”
In the luxury market, it’s seldom about who has the most cash available. You can assume your competition is well-qualified, working with a good lender, and ready with the down payment. Your real estate agent has all of the pertinent information and details, and so does theirs.
In these circumstances, you must make your offer stand out. This involves doing more than raising the amount you’re willing to spend on the property. Let’s take a look at specific tactics you have at your disposal.
Tips for winning a Beverly Hills real estate bidding war
Hire a buyers’ agent
This might seem obvious, but there are buyers out there who think they can handle this situation without professional help. A qualified buyers’ agent such as Colin Wellman or Todd Stein will step up and represent you while navigating the complexities of the transaction.
A strong realtor will bring a wealth of experience and expertise to the table, which will prove essential in the outcome. Choose a qualified agent who is well versed in the Beverly Hills real estate market and has a long track record of success. They will prioritize communicating the critical information about the transaction and corresponding market so you will be empowered with knowledge when making decisions.
A good buyers’ agent will work with you from before you even start looking at homes until closing and will strategize with you to ensure a successful purchase. Additionally, make sure you work well with your buyers’ agent and are comfortable with them. You will be showing them your financial situation and embarking on an exciting but challenging real estate journey with them.
The price still matters
You still need to make the right offer. Make sure you accurately understand what the property is actually worth. Your realtor can help with this. Be prepared to go above the asking price, but keep the amount at what you are willing to pay. The asking price does not always resemble what the property is worth. More often than not, the listing price is used as a marketing tool.
Lowballing is not going to work but going too far above carries the obvious risk of paying more than the property is worth and limiting your ability to get a return on your investment. You should know your number before you place your offer and be willing to stick to it. It’s very easy to get emotional and so determined to win that you miss the big picture. Also, consider how long you plan to live in the home; you might be more comfortable paying more if your goal is to remain for 20 or 30 years rather than if you are thinking about moving after five. Consider how much you will pay for upgrades, renovations, and any other alterations as well.
Remember there are other homes which suit your needs, no matter how perfect this one appears. At the same time, the loser in a bidding war almost always wishes they had gone higher. Come out of the gate with a strong bid you mean to follow through on.
If possible, meet the seller
Selling for the highest amount is not always the highest priority for homeowners. People get emotionally attached to their residences, and many like to know who will be taking their house and how they are going to treat it.
A face-to-face meeting — even a virtual one — can significantly influence how much the seller remembers you, knows what you stand for, and can consider the intangibles. You should let them know how much you want the house but not appear desperate or begging. You may even be able to leverage this into an opportunity for a private tour that will allow you to connect more with the seller and gain an even more comprehensive understanding of the property.
If meeting the seller is infeasible due to schedules or if they refuse to meet with you, send them a thoughtfully written letter detailing why you want their house and why they should pick your bid.
Limit contingencies
Only put a contingency on your offer if you have absolutely no other choice. However, you typically have a choice. Get an inspection done before making the offer if you can, rather than making your offer contingent on an inspection.
Given a choice, a seller is actually likely to accept a slightly lower bid with no contingencies as it eliminates the risk of having to start the whole process over again. Sometimes a contingency may be unavoidable, but if you can manage without them, do.
Consult with your realtor to determine whether a contingency is necessary for your transaction or not.
Make an all-cash offer
The bottom line is: cash is king. If you can afford to make an all-cash offer, this can be the most successful strategy.
It takes less time to close if you don’t have a mortgage lender involved. Sellers will often accept a lower offer in cash over a higher one that involves a bank. Additionally, there’s no question of your ability to pay. You may need to provide the documentation that you do indeed have the money, but the seller won’t be wondering if the deal will fall apart.
If you have the available capital and can manage it, it’s often the best way to win.
If you can’t pay cash, get pre-approved for a loan, so you don’t have to put a financing contingency on your offer. Choose a highly reputable lender, so you are not in danger of your loan offer abruptly vanishing at any point in the process.
Attempt a pre-emptive offer
Sometimes, the best way to win is simply not to play. It’s always worth trying to submit an offer before the bidding war starts in the hope you can avoid it. This does not always work, but if you have a good realtor on your side, you can sometimes pre-empt an offer.
There’s no one way to do this, but a cash offer can be particularly tempting. Again, you don’t want to appear desperate, but there’s nothing wrong with showing how much you want the home as long as you keep it dignified. It’s also a good idea to do a pre-offer inspection and, if you are going to try and pre-empt, do it as quickly as possible.
Be flexible
Find out what you can about the seller and what could motivate them to pick your bid over another for a similar amount. This might include flexibility with the closing date, which would allow the seller to take appliances with them or create additional transition time when moving.
Always find out what the sellers’ timeline is. Would you consider letting them stay for 30 days in the property after closing so they can finalize their move? Some sellers may appreciate a longer timeline so their kids can finish out the semester, while others might be relocating for work and need to move fast.
Earnest money can also help too. These funds are placed in an escrow and then applied to your down payment at closing. This is a quick way to demonstrate that you are serious and can afford the price.
Pay attention to what the seller is likely to go for. You can even offer to help with the seller’s relocation costs – anything to emphasize your commitment to this property.
Escalate
An escalation clause means you promise to beat a higher offer by a certain amount. For example, if you offer $1.5 million and somebody else offers $1.6 million, yours might automatically go to $1.7 million.
Make sure to limit this, but it is a convenient way to not have to come out with your higher offer right away. Your buyers’ agent can advise whether this is a good idea in a given situation, depending on who else is involved and the known tactics of the sellers’ agent. Some sellers don’t care about the escalation clause or think they will get less money — both of which are essential to consider in this scenario.
Stay positive
It’s not a good strategy to point out all the flaws in a house to try and get a lower price. First of all, it’s transparent. Second of all, it makes sellers question whether you want the property or, for that matter, whether you are buying it to flip.
Never disparage the listing agent either. Talk about what you appreciate about the house. It doesn’t always pay to be too enthusiastic, but pointing out chipped paint is something the seller might remember when comparing offers.
Ready to win your next bidding war?
Winning a bidding war is a challenging process, and it’s vital to have a good buyers’ agent. For more information on how to handle a bidding war or about Beverly Hills real estate, please don’t hesitate to reach out to Campbell Wellman Real Estate for expert guidance.