Revival of the Home-Bidding War
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The bidding war for a home is not extinct. Bidding wars are cropping up in some parts of the country. While it's a far cry from the heady days of the real estate bubble, the revival of the bidding war spells opportunity for sellers.
"The housing market has been skipping along the bottom since 2007," says Doug Breaker, president and CEO of HomeFinder.com in Chicago. "There's pent-up demand now as people are finally realizing prices won't go too much lower."
With more buyers in the market, sellers have greater control over the price for which they can sell and may see multiple offers come in if they play their cards right. There is one caveat: location. "To get a bidding war, you have to have a good location," says Brendon DeSimone, a real estate expert in San Francisco. "If you are in front of a bus stop or across the street from a school, it's not going to happen."
If you live in an area that's in demand, there are ways to create a buyer frenzy. From pricing it right to stacking the open house, here are five strategies to spark a bidding war.
Price to Sell to Get Those Bids
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If you overprice your home, you won't draw much buyer interest, and the house will languish on the market. To drive demand, attract multiple offers and start a bidding war, you have to price your home just right.
You must analyze the comparables and then price the home slightly below what it's worth, according to Michael Corbett, author of the book "Ready, Set, SOLD!" "You don't want to go much lower than what the house is really worth because when you underprice, people will think something is wrong and start lowballing you," he says.
Corbett recommends using comparables that are no more than 60 days old and to include comps for homes that were sold in foreclosures and short sales.
The tactic of setting a low asking price is more likely to spark a bidding war where the local housing market is hot, Breaker says. In a soft market, setting a low asking price might result in a quick sale but at a disappointing price.
Host a Broker Open House
The more real estate agents who know your house is on the market, the more potential offers you can draw, potentially beginning a bidding war. "A lot of times, brokers have a buyer in mind and see your property and think, 'Oh wow, this property is perfect for this buyer,'" Breaker says. "Hosting a broker open (house) gets the word out among brokers."
Hosting a broker open house is your agent's job. Your agent will know all the local players and how to lure them to the showing. "You want to get as many Realtors through the house in the first week as possible," Corbett says.
Many areas of the country have a "brokers caravan" in which real estate agents tour a handful of houses that are about to be listed for sale. If you live in an area where brokers caravans are held, DeSimone says to make sure your house is part of the tour.
Create a Website for Your Home
The Internet and social networks can be leveraged to create buzz about your house, making a bidding war more likely. Creating a website for your home lets you post pictures of the house and gives you the ability to share the link on Facebook, Twitter, LinkedIn and anywhere else potential buyers may be hanging out.
"Now 80% of all homebuyers first preview houses online. The more elaborate the online presence, the better," Corbett says.
A house's website should contain a lot of pictures and a diagram of the floor plan, Breaker says, so buyers can envision how their furniture would fit. "Having a website just for your house is a powerful tool," Breaker says. "It helps drive interest."
Stack the Open House
When a house gets multiple offers, they typically arrive shortly after the house is put on the market. A way to maximize exposure is to have an open house for potential buyers shortly after the home is listed. If you have an open house that is full of potential buyers, there's a chance for a bidding war because buyers don't like feeling they are missing out, DeSimone says.
One way to stack an open house is to have your real estate agent schedule showings back to back, so potential buyers will bump into each other on the way in and out.
Stage the House
Your home is more likely to garner interest and be the subject of a bidding war if it is staged: free of clutter, scrubbed of pictures and personal items, and with neutral decor.
"It has to look like it's out of the Pottery Barn magazine," DeSimone says. "Buyers fall in love with how it looks."
Corbett says the biggest mistake a homeowner can make is not getting rid of the clutter. Equally important is making sure the house has curb appeal because some buyers won't even get out of the car when scouting prospective homes. "You want the home to read like a five-star hotel. You want the space to speak for itself," Corbett says. The idea is to make it as inviting as possible, so buyers could see themselves living there, he says.