How Is Today's Market? Are Multiple-Bids Back?

Read this SmartMoney article and this Wall Street Journal article, in which I was quoted discussing another sign that the market is making a come back in stronger markets such as ours. Find out what buyers should expect, especially in purchasing well-priced homes and foreclosures.

Competition is back for home buyers, says the Wall Street Journal web site, and it’s a good sign. Competition signals housing market recovery, but it also creates bidding wars.

Winning a bidding war can generally snag you a house at a bargain price, but bidding wars actually drive home prices up because they play on buyers’ worst fears. When a bid is rejected, it makes a buyer want to be more aggressive and move faster on the next offer.  This can then push home prices higher than they are really worth.

Experts say there are three things you can do to avoid a bidding war or to survive should you find yourself involved in one.

• Research a neighborhood’s home inventory – Find out the number of active listings in an area versus those under contract. Many active listings mean prices have dropped significantly in that area due to a glut of available homes. In this case, a bidding war might work in your favor—even if buyers bid up the price, the house could still sell for less than it’s worth.

• Check employment numbers – Where there are strong employment numbers, there are people with the good buying credentials, i.e. a down payment and work documentation. Expect bidding wars in these areas.

• Be prudent with foreclosures – Don’t lose track of your goal with a foreclosure—to get a huge discount on the home you buy. Bank-owned homes sell for about 36% less than regular listings, so you wipe out any savings by bidding the price up above that level. And that doesn’t include potential renovation costs. 

Be aware of when you might be walking into a bidding war so you can choose whether or not to engage in battle. Know your price limits and when to walk away to fight again another day.

Contact me today for expert help buying or selling in the DC, MD, & VA area!