There is an alarming trend among many buyers of real estate these days. We’re seeing more and more people who want to “place bids” rather than to “make offers” on a home.
Real estate is not eBay. While some real estate is sold in an auction format, the vast majority of sales are not. I realize that in some markets buyers are in full control given the volume of short sales and foreclosures, but in many places the markets are balanced and in some places there are seller’s markets.
In the north Dallas suburbs, there is a severe shortage of good properties under $150k. Last weekend I was out with some first time homebuyers who had been looking for weeks. We found a home the first day it was on the market. By day 3 there were multiple offers and my clients actually had to offer more than list price in order to secure the contract. It’s a seller’s market for good homes under $150k.
I’ve seen buyers totally upset when their low “bid” was not countered while a more reasonable offer was negotiated and accepted. That’s not to say that a lower offer is not appropriate at times such as with an overpriced property. However, throwing in a bid at 70 percent of market value on a hot property is usually a waste time.
Many investors use this approach but don’t really care if hundreds are rejected while they look for the one seller who will sell at that price. The average home buyer will quickly become frustrated using this method.
Many of our younger buyers have grown up bidding online and to some extent bidding has become part of America’s landscape. While I suspect this trend will continue in consumer goods, I don’t think it will last in the housing market and certainly does not apply to seller’s markets.
My advice is to know what kind of market you’re looking in and use an appropriate strategy rather than always going in with a “bidding” strategy.
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