This is the second post in my blog series about tips on home buying that will help prevent you from paying too much for the home you like. You can read Part 1 here. In this article, I’ll be using a case study to illustrate the strategies that sellers use to generate bidding wars, and the strategies you can use as a buyer to protect yourself.
One reason why sellers of fixer-upper homes often price their properties competitively is because they know what buyers do when they see a good deal come on the market – they get excited. So excited that they often forget what kind of price they need to pay for the property in order for it to still be a good deal.
Tips on Home Buying – A Case Study: Protecting Yourself in a Bidding War
Some buyer clients of mine recently made an offer on a fixer-upper home that was priced very competitively, and we knew from my analysis that it was worth more than the list price. Sure enough, the home received multiple offers, so I strategically helped me clients prepare an escalation addendum.
The escalated sales price in my clients’ offer went up to the maximum price my clients were willing to pay. That decision about their maximum price was a smart one, especially given the work the property required. Recent comparable sales of renovated homes in the subdivision revealed a clear cap that showed the maximum potential sales price of renovated homes in the area.
In Part 3, we’ll continue discussing tips on home buying and what happened in this bidding war scenario. Just like in auctions that don’t relate to real estate, you reach a point as a buyer where to proceed with a purchase would mean that you’re no longer getting a good deal.
Are you looking for more tips on home buying in Northern Virginia? Email me at DarrenRobertsonHomes@gmail.com to subscribe to my newsletter, which will give you valuable weekly tips!