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Summary: Bidding wars happen when multiple buyers are interested in the same property. This article discusses tips to help buyers in Seattle and Bellevue win against the competition in a bidding war.
Bidding wars are one of the unpleasant realities of the real estate market. A bidding war occurs when two or more buyers are interested in the same property at the same time. These buyers place competing offers for the same property. Just as with an auction, the bidding war stops when one buyer makes an offer that isn’t topped by any other buyer.
Understandably, a home bidding war isn’t something that most potential home buyers want to think about. But even though that’s the case, buyers should still take the time to learn how to navigate this situation because bidding wars can happen in virtually any market. Plus, certain markets, such as Bellevue and Seattle, have higher rates of bidding wars than other markets.
If you’re thinking about buying a home in Seattle or Bellevue, therefore, it’s a very good idea to understand how to prepare for and approach a home bidding war.
In this post, we will give a few important tips which can help home buyers win in a bidding war for a home in Seattle or Bellevue. First, we will give a quick rundown of the numbers on both the Seattle market and the Bellevue market. Then, we will give specific tips for winning a bidding war in Seattle and then move to discuss specific tips for Bellevue.
Even though these markets have cooled down in recent months, there is still some possibility that buyers may encounter a bidding war in either of these markets. Seattle and Bellevue are still highly attractive places, and so buyers can’t rule out the possibility of dealing with a competing offer.
To recap, we will go over the following:
- A quick look at the Seattle market
- A quick look at the Bellevue market
- Tips to win a bidding war in Seattle
- Tips to win a bidding war in Bellevue
Quick Look at the Seattle Market
As of June 2020, Seattle has a median home value of roughly $767,900. That figure represents an increase of about 2.2% from the previous year. On the whole, the market in Seattle is presently classified as “cool,” and so buyers are less likely to encounter a bidding war today than they were in previous years. Previously, when the Seattle market saw double-digit gains on a year-over-year basis, buyers encountered competing for offers all the time.
Quick Look at the Bellevue Market
The Bellevue real estate market currently has a median home value of about $987,600, as of June 2020. This represents an increase of about 4.4% from the previous year. The Bellevue market is a highly desirable market, and so even though things have slowed a bit doesn’t mean that buyers aren’t likely to encounter a home bidding war. Simply put, if you’re preparing to enter this market, you should be psychologically well-equipped to deal with a bidding war.
Tips to Win a Bidding War in Seattle
As mentioned, even though the market in Seattle has technically slowed down a bit, buyers are still quite likely to encounter competing offers. If we consider the sheer desirability of the Seattle market, this shouldn’t come as a surprise. If a buyer does come across a bidding war for a Seattle home, there are a few tips that can make the difference between winning and losing.
High offer price. The first tip – which should be intuitive – is to offer the highest price. If your competitor ups the ante and puts down a higher offer, simply respond by raising the price still further. The problem with this approach, however, is that it can quickly turn your purchase into a financially depressing situation. You might win the bidding war, but only at a price which makes you a bit uncomfortable. To overcome this problem, you can use other tactics.
Personal letter. Another tactic is to write a personal letter to the seller. The more personal you get in your letter to your Seattle seller, the better. Make it clear that owning a Seattle home has been your dream for a long time, and that owning the home would be a transformational, life-altering experience.
Waive the finance contingency. Another tactic you can use is to waive any financing contingency. Sometimes, buyers make offers which include a contingency on obtaining a mortgage loan. Understandably, sellers prefer to have offered without such contingencies, and so you can improve your competitive standing by removing a financing contingency.
Make sure you are aware of the risks involved in removing any contingencies, especially those related to inspections, appraisals or financing. There are a number of unexpected things that can come up and contingencies are there to protect the buyer’s earnest money.
Tips to Win a Bidding War in Bellevue
The tips we’ve discussed for winning a Seattle bidding war may be transferrable to winning a Bellevue bidding war. But, the Bellevue market is perhaps even more competitive, and so it’s worth it to identify a few more tips that apply specifically to Bellevue.
Be flexible with closing. One tip to out-competing other buyers for a Bellevue home is to comply with whatever closing date is preferred by the seller. Sellers often have specific time frames in which they’d like to close their homes. In some cases, buyers aren’t able to comply with the desired time frame for any number of reasons. One way you can definitely achieve a leg up on the competition is to agree to whatever closing time is desired by the seller.
Waive inspection. Another tip you can use to out-compete other buyers is to waive any inspection contingency. Buyers often place offers that are contingent on a successful inspection of the property. The reasoning behind this is pretty straightforward, but avoiding this contingency may very well give you a competitive advantage.
Escalation clause. Finally, another tip you can use to out-compete other buyers for a Bellevue home is to use an escalation clause in your offer. An escalation clause is essentially a promise made within your offer to raise your offer, up to a certain limit, in the event that other buyers make competing offers.
For instance, you can make an initial offer on a Bellevue home for $950,000, with an escalation clause that peaks out at $1 million. This means that you agree to raise your offer in order to out-compete other buyers, but you won’t go above $1 million.
An escalation clause can be a very effective tool because it communicates to the seller that you are very serious about the property. This demonstration of seriousness can mean a lot to certain sellers. This is precisely the type of tip that can make or break a bidding war in a highly competitive market such as Bellevue.
As you can see, there is a lot of information to digest when it comes to winning in a competitive bidding war in either the Seattle or Bellevue market. These markets are among the most desirable in Washington State and the West Coast of the U.S. in general. This means that buyers should be prepared to encounter competing offers, even if this may be a bit less likely than it was in previous years.
Contact Sammamish Mortgage for Additional Information
If you’d like further tips on how to win a bidding war, Sammamish Mortgage can help. We have been helping borrowers across Washington, Oregon, Colorado, and Idaho since 1992. We offer many mortgage programs with flexible criteria. Contact us to start the application process for a mortgage loan today.