Avoiding A Bidding War Buying Your Home in Chicago
“I don’t want to get into a bidding war. “ In the Chicago area real estate market, the supply of inventory remains generally limited and many homes listed for sale are seeing multiple offers presented. This is great news for sellers. For buyers, though, there’s a concern about paying too much. That’s understandable.
The most important thing to remember about the multiple offer scenarios is to know that multiple offers do not necessarily mean multiple quality offers. It just means that more than one offer has been presented. I remember one listing that I had with six offers presented. However, only two of the six offers were at list price. The other four were less and a couple were just completely lowball. Multiple offers just means more than one offer were presented.
In a tight market like today, knowing market value is key in making sure that you are not overpaying. Prior to submitting your offer, a good agent will pull comps in order to determine market value for the property. It should be noted that for the 12 months ending January 2015, the median sales price to list price (final list price at time of sale) is 97.7% in the city of Chicago and 97.0% for the Chicago metropolitan area overall. There are often price reductions before the market decides that the price is right but it seems like accepted offers overall are not far from the listing price. However, knowing the market value helps you to make sure that the list (asking) price is reasonable before determining your offer price. From there, you and your agent can decide on best negotiating strategy or whether you move on to next property.
As part of a good negotiation strategy, you should already know the maximum you are willing to spend on the home. Take into account the market value, the availability of other homes that fit your criteria and the cost of needed repairs or improvements that you want to make. If you have already decided the maximum you will be willing to spend, there’s less chance of a frantic bid that breaks your bank or will cause buyer’s remorse later.
It should also be noted that legally, the listing agent is not able to reveal the amount of competing offers unless specifically authorized to by the seller. Many buyers believe that there is an advantage in having the listing agent present the offer. However, ethically speaking, the listing agent works for the seller and is not to provide any inside information that goes against the interest of the seller. As a buyer, you have to decide whether your interests are better served having your offer presented and negotiated by your own agent or the seller’s agent. In addition, this approach means working with different agents for every property rather than having one agent focused on finding your new home.
Multiple offers are just part of the current real estate landscape. Avoiding them may very well keep you out of the home of your dreams. If you’re not on the playing field, you can’t win the game. Just play smart and keep cool.
If you are looking to buy or sell your home in the Chicago area market, please give me a call at (312) 217-5644 or email me at email@example.com.