Cash is king when it comes to winning bidding wars.
All-Cash Offers 4X More Likely to Win Bidding Wars
Prospective homebuyers in 2021 who offered all cash deals were more than four times likely to “win” in bidding wars, according to a just released study by Redfin. Sure…other strategies thought to win bidding wars in competitive markets helped to win bidding wars but, all-cash offers were definitely the winningest.
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Take a look:
Strategy Improved Competitive Edge
All Cash +334%
Waive financing +31%
Waive pre-inspection +25%
Waive inspection No significant improvement
Escalation Clause No significant improvement
Bidding Wars of 2021 Even More Rampant and Costly in 2022
Potential homebuyers in 2021 who thought they’d “wait” for a less competitive, more well-supplied housing market in 2022 have been grossly disappointed. January 2022 was the most competitive housing market with the most bidding wars on record.
From +30% of all for-sale homes selling above list prices in each month of 2021, February 2022 saw the share of for-sale homes selling above list prices increase to 43%!
The good news for 2022? The supply of for-sale homes in 2022 could increase during the second half of 2022 and the list prices of for-sale homes could decrease as a result of rising mortgage interest rates but bidding wars will likely remain the norm during the second half of 2022.
Alternate Strategies for Non-All Cash Buyers
All cash offers will likely remain the winningest strategy during 2022 but there are alternate strategies for non-all cash buyers to consider:
- Prepare to compete by getting your financial ducks in order
- Prepare by connecting with an agent with a record of successfully explaining to sellers that their buyer client’s finances are reliable and that the deal will close
- Prepare by discussing with your agent how much over the asking price you’re willing and able to offer the seller
- Prepare by discussing with your agent the contingencies you would be willing to waive including the appraisal contingency which would translate into your paying the agreed-upon price even if the appraisal comes in lower than that price.
- Prepare by discussing with your agent whether or not you would be willing to offer the seller a lease-back arrangement to accommodate their moving timetable
- Prepare by discussing with your agent a combination of the above strategies that may be effective with/for the seller.
An important question for you. 2022 is here…have you completed your 2022 Real Estate Business and Lead Generation Plan? If not, no worries. We have done the hard work for you. Download your 2022 REAL ESTATE TREASURE MAP! Text HARRIS to 47372. It’s that simple and takes 3 seconds. Text HARRIS to 47372 and when you do we will instantly text you back with a link to download. BONUS: For a limited time when you text HARRIS to 47372 you will also receive a Coaching Call!
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Thanks to Redfin and Inman.
