- Monthly Q&A with Lane Hornung.
- Bidding wars no fun for sellers or buyers.
- “California-listings” can make choosing a winner easier.
There’s a reason they’re called bidding wars, not bidding picnics.
Wars are seldom fun, even for the winners.
While much has been written about how to win a bidding war, little has been said about a bidding war from the seller’s perspective.
The rough and tumble world of bidding wars is the focus of this month’s question and answer session with Lane Hornung, president and founder of 8z Real Estate and John Rebchook of InsideRealEstateNews.com.
John: It’s obviously frustrating and stressful for the buyer to engage in a bidding war for a home, but what about the seller?
Lane: Ask anyone who has been through receiving multiple offers for their homes and they will tell you it is a stressful situation. A seller has to be ready for a really high-pressure situation.
Lane: Part of it, I think is cultural. In the U.S., a lot of people aren’t comfortable with the idea of bidding wars. By choosing a winner, you really are choosing multiple losers, too.
John: Any strategies for reducing the stress of dealing with multiple offers?
Lane: The timeline of when you accept the offers can relieve some of the stress. One strategy is to accept all of the offers on a single day. At 8z, we call that a California-style listing. That is a common practice in California where they have experienced tight inventories and multiple offers for many years.
John: What happens if you don’t set a date to receive all of the offers?
Lane: A lot of listing brokers don’t do that and it becomes a race of who can get their offer in first. But with a California-style listing, you really have a level playing field. And sellers, by showing some patience, might get $10,000, $20,000 or $40,000 more for their home.
John: Speaking of price, why not just accept the highest offer? End of story.
Lane: The highest offer might not be the best offer. There are some buyers out there who know they can get out of the deal after the inspection. They might try to renegotiate the sales price after the inspection.
The appraisal is also a key term. Is the buyer willing to waive the appraisal?
The other thing is the closing date. Some people may want to close as quickly as possible. Increasingly, in today’s market, people want to delay the closing, in order to find another house.
John: Anything else to look out for?
Lane: The seller, or the seller’s broker, needs to assess the buyer’s agent. Is the buyer’s agent a full-time professional or a hobbyist? A good agent knows how to get their clients to the closing table. This market is getting more and more complicated, and a buyer’s agent who doesn’t know what they are doing may not know how to navigate today’s choppy waters.
John: Increasingly, prospective buyers have been told to write letters to sellers making a case why they should sell them the house. Should a seller give much weight to a non-monetary issue like a letter?
Lane: That’s up to each individual seller. But I am not going to fault anyone for giving consideration to buyers who says they can really picture themselves raising their family in your home or they love your garden and will take good care of it. Like everything in real estate, selling and buying a home is a unique combination of finance and emotion.
That’s what makes real estate unique. You’re not selling stocks or bonds.
8z Real Estate is a sponsor of InsideRealEstateNews.com along with Universal Lending Corp. and Land Title Guarantee Co. A monthly Q&A with Lane Hornung is a feature of IREN. Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.