Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.
NYC’s real estate market is one of the most competitive in the world for home buyers. For example, you think you have found your dream home on StreetEasy and go to the open house to learn that you are competing with three other potential buyers. How to win a real estate bidding war on homes in NYC? Real estate agents at NestApple are here to help! We are giving you strategies to give you an edge in winning real estate bidding wars.
The term “comps” is short for comparable sales. Ensure NestApple runs comps to justify the value of the home you hope to buy and evaluate that relative to the asking price.
First, compare coops to coops and condos to condos, and it would help if you made an informed decision.
Indeed, as with any investment, you want a clear strategy to ensure you do not let your emotions get the better. Remember: buying an apartment is a business deal!
When you make an offer, you probably know your budget well. However, when encountering a bidding war, NYC buyers may get carried away by their desire to win and lose sight of the bigger picture. Then, draw a line in the sand with your budget so you do not overextend yourself.
Don’t compare yourself to others. Your budget, needs, and requirements are yours and should be the only criteria to consider.
There are plenty of homes in NYC, and there will be other opportunities. You always want to avoid a bidding war: if there’s a bidding war, it means someone is overpaying.
Make sure your buyer’s agent runs comps to justify the approximate value of the condo or co-op you are hoping to buy and evaluate that relative to the asking price for the apartment. It would be best if you made an informed decision.
As with any investment, you want a clear, well-research strategy to ensure you don’t let your emotions get the better during a negotiation.
Wouldn’t you prefer to sell your home to someone who genuinely appreciates it rather than to someone who nitpicks its flaws or seems apathetic in an attempt to gain leverage during negotiations?
It’s common for people to bid in round numbers. This means offering an odd number can help you stand out and potentially come in just above a similar offer. For example, it is offering $751,500 instead of $750,000.
As a buyer, you may consider accommodating the specific requests of the seller. This could include agreeing to a speedy closing, purchasing furniture, or allowing the seller to remain in the property for a certain period after the sale has been finalized.
Also, price is not the only aspect to consider when preparing your offer. Non-financial terms are a great way to make your request stand out. This may include timing, flexibility on the target closing date, and a short-term leaseback option.
Some sellers are motivated by terms; for sellers that want to sell their apartment but have not lined up their relocation, offering a short-term leaseback can remove much stress during the home sale process. For instance, some sellers might prioritize flexibility with timing over a higher price.
Whether you have strong ties to a community, are a first-time buyer, or are experiencing a life event, telling your story can help create a personal bond with the seller. Writing a heartfelt personal offer letter about yourself and what buying that property means may position you favorably.
You should specify what you love about the house and personal connections. Your agent should write a carefully crafted letter on your agent’s letterhead (scanned and emailed is acceptable) explaining your offer and its reasoning and reference supportive information like comparable sales. It communicates sincerity and demonstrates that you are probably not making multiple offers on ten properties simultaneously.
And usually, the seller’s broker will show it to the seller, ensuring you have an advantage.
It’s advisable to make an all-cash offer. Still, if that’s not possible, you may want to consider forgoing the mortgage contingency to compete with a cash offer, provided you haven’t already done so.
Therefore, being an all-cash buyer makes you seem like the better, safer option for a seller looking for a smooth transaction. If you have enough liquid assets sitting around to purchase the apartment with an all-cash offer, it is not uncommon for wealthy buyers to buy the property all cash and take out a mortgage after closing.
People call it “delayed financing” or “cash-out refinancing.”
For those buyers in the financial position to pursue such a strategy, it is best to speak to your mortgage professional and accountant. You need to understand how much you’d be approved for in delayed financing and any timing requirements to complete such financing after closing.
Lastly, a commission rebate can provide additional buying power relative to your competition. If you buy a $2 million home with a 6% commission, your buyer rebate totals 2% of the home purchase price.
Therefore, that’s a savings of $40,000 that you can use to increase your buying power. In other words, you can use an extra $40,000 to win a bidding war on a house.
Now you have enough tools to win a bidding war in New York City.