How to win a bidding war in New York City
Go Back To Previous PageNYC’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 you go to the open house to get informed that you are competing with three other potential buyers. How to win a real estate bidding war on homes in NYC? Do not worry. NestApple is here to help! We are giving you strategies that will give you an edge on how to win real estate bidding wars.
How to win a real estate bidding war on a house in NYC: first, run the comps.
The term “comps” is short for comparable sales. Ensure NestApple runs comps to justify the value of the home you are hoping 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!
Bid within a budget
By the time you make an offer, you probably have a good idea of your budget. However, when encountering a bidding war, NYC buyers may easily 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. You don’t want to be that someone.
Evaluate Comparable Sales
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.
Customize an offer with non-financial terms
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 a lot of stress during the home sale process. For instance, some sellers might prioritize flexibility with timing over a higher price.
Personalize your offer with a house offer letter
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 you are probably not making multiple offers on ten properties at once.
And usually, the seller’s broker will show it to the seller, ensuring that your points will not be lost.
Buy All Cash, Take a Mortgage Later
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. This is sometimes referred to as 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 to understand how much you’d be approved for in delayed financing and any timing requirements to complete such financing after closing.
To win a bidding war in NYC, get an advantage with an agent commission rebate.
Lastly, getting 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 commission 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.
Georges has been working in Wall Street for the last 16 years trading derivatives with hedge funds. He has been an active real estate investor for over a decade. Georges graduated from HEC Business School in Paris and holds a master in Finance from ESADE Barcelona.
