A bidding war occurs when a seller has more than one potential homebuyer trying to purchase the house. The result is multiple offers trying to outdo the others, and potentially more money for the seller.
From a seller’s perspective, a bidding war is a great situation. More than one person wants to buy the home, so the seller just has to evaluate the offers, and decide which provides the most money and fits his/her timeline for closing. If the offers are similar as to price, the seller can decide which one has a better closing date or which one wants less from the seller (such as the refrigerator, etc.). The end result is hopefully greater profit for the seller.
From the buyer’s perspective, a bidding war is not such a good thing. After finally finding a home that s/he wants to purchase, now someone else wants the same house, and a competition ensues. A bidding war can be very stressful for the potential buyer. The buyer can offer an amount over the asking price and still find that offer rejected.
If you find yourself in a bidding war, remember some important tips. First of all, avoid falling in love with a house. There are so many homes to buy: don’t get emotionally attached to one before it is yours. That helps you not to offer more than you can afford because you have to have that house. This leads to the next point: don’t offer more than you can afford. With the spirit of competition, it can be easy to forget that the “winner” has to make the mortgage payment. Don’t get so caught up in trying to win the house that you offer so much that it is going to put financial stress on you. Finally, keep looking. If the sellers accept your offer, great, if not, you are still house hunting and may find something that you like even more for a better price.
