Rules for Navigating a Bidding War in Chicago’s Hot Real Estate Market
This summer, we’ve seen a swift change in the game when it comes to Chicago real estate. Sellers have gained the upper hand, with low home inventories, a lift in prices and increasing mortgage rates all leading droves of buyers to lock down a deal as soon as they can.
That unbalance between the number of potential buyers and potential homes to actually buy has put bidding wars in full effect in Chicago real estate and beyond. In June, nearly 70 percent of homes sold across the nation saw multiple offers. Pent-up demand from the last few years has created more buying competition than the market has seen in some time.
So how does a buyer come out on top in a bidding war? Offering the highest price may be the most obvious answer, but that doesn’t always mean the buyer is ending up with a good deal. From getting pre-qualified to acting quickly, there are some steps a buyer can take to ensure they find the home they want and end up making a deal that works on both ends.
An article in last week’s Wall St. Journal offered some great insight for buyers who find themselves in the midst of a bidding war. Here are a few of the top tips: Know the neighborhood: Each month I recap the previous month’s luxury home sales for both single-family properties and Chicago condos. These are great to review in order to learn what transactions recently happened, giving you an idea of what kind of properties are selling, in what neighborhoods, with what features, and for what price points. Being familiar with a particular area and the price tags that come with it can certainly give you the knowledge you need to make the just-right offer. Be realistic: Gone are the days of low-ball offers in hopes that a seller just wants to offload their property. While you want to get a good deal, chances are high that your offer won’t be the only one and a too-low bid will go right into the rejection pile. If you find a home you truly want, it’s often best to put your best offer out there, quickly. Decide what you won’t pay. Because homes are moving quickly, buyers have to act fast, both in terms of making an offer and knowing when to move on to something else. While a bidding war can amp up the excitement of making a Chicago real estate purchase, it can be very easy to get carried away. As well as an offer price, buyers should know a maximum price they’d be willing to pay and walk away if bids surpass that number. Be flexible: There’s more to a real estate offer than the purchase price, and this is another way to entice sellers with your offer. Be sure to add any additional factors to your offer that could entice a seller: quick closing dates, convenient moving arrangements, waiving contingencies, etc. Have your agent ask the seller what’s important to them and what else you can include in your offer. Don’t wait. When the competition is stiff, there’s simple no room for dawdling. If you find something you like, make an offer. Now. Offer to be a back up. If you find yourself losing out on a home you really wanted, offer to be a back-up, even if another bid has been accepted. Deals fall through, and it doesn’t hurt to keep your name in the game until all papers are signed and final.
In addition to properly navigating a bidding war, there’s another important angle to consider: connecting with the seller themselves. Check back for the next blog which will provide additional information for a more in-depth look at how reaching out to the folks behind the for-sale sign can make a big difference in a multiple-offer situation.
In the meantime, if you’re interested in learning more about what this whirlwind market might mean for your own purchase, give me a call at (312) 498-5080 or email me at [email protected]