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Preparing for the Bidding Wars

March 12, 2015 By Doug Francis

Bidding on Real Estate - iStock Photo by Oli Scarff

Bidding on Real Estate

After reading today’s authoritative article “Bidding wars a legacy of housing bubble” in The Washington Post, you may think that many sellers are using a strategy of under-pricing their home to spark a bidding frenzy.

Want to know what it is really like? Then ask any home buyer in Northern Virginia about finding a below-market priced home.

The truth is… today’s home sellers are pricing their homes to squeeze every nickel out of them.

Buyers decide based on more than price

What causes a home to appeal to many people simultaneously is influenced not by a clever pricing strategy, but by the uniqueness of the location, available supply of comparable homes, interest rates, investor demand, and condition of the home.

For example, I recently put a townhouse on the market that was located in the center of Vienna VA. It is located a short walk/distance to the Community Center, the W&OD Trail (a 42 mile converted rail line), Whole Foods, a weekend Farmers’ Market, a public library, the Town Green, playing fields and Vienna Elementary School.

When it went on the market, there were no other (meaning = 0) town homes near that location for sale.

Interest rates for thirty year mortgages had just dropped to a six month low.

Investors know this particular location rents well. In fact, the last sale in the neighborhood was to an investor who rented out the property quickly.

This forty year-old home was in very good condition. That means, excellent move in condition with plenty of updates but nothing brand-spankin’ new.

The sellers opted to price it on the high side… just so they had room to negotiate if only one offer came in.

The results: Six offers arrived within the first five days.

So… was it a bidding war, you ask? No, not really.

That’s because real estate offers are elaborate contracts, and certain favorable “terms” can trump the price.

That’s because real estate offers are elaborate contracts, and certain favorable “terms” can trump the price.

If you read the Post article, the impression that William Strange and Lu Han, economists at the University of Toronto’s Rotman School of Management, is that pricing a home intentionally low is a commonly used way to sell homes.

In my experience actually helping sellers and buyers, real estate will sell at the price of the moment. And setting an asking or list price must be within a carefully calculated range that will appeal to the market of the moment. Pricing is “opaque” because each property is uniquely influenced by that specific moment in real-estate-time.

Too high and the house may never sell. No bids, no offers, and no sale.

And today’s smart home buyers aren’t willing to go into “bubble” territory. If they sense they are getting unsure about the price or a bad vibe, then they will pull their offers ~ ask any local real estate agent about clients getting “cold feet“.

Although I can easily ramble on about poorly written offers, missing information, home inspection and other typical real estate contingencies, you should understand that the bidding war strategy is not happening in 30 percent of the Northern Virginia real estate market.

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Filed Under: Blog, Home Buyer Tips, Home Seller Tips Tagged With: Home Buyer Tips, Vienna Virginia, W&OD bike trail

About Doug Francis

A Realtor specializing in unique and new homes around Vienna, Virginia, Doug started writing a first-hand blog about his everyday real estate experiences a decade ago. In depth, helpful and fun has always been the objective. Outside real estate, he "starred" in a tech commercial for Verisign's "Where the World Clicks" campaign, and was quoted in Money Magazine's Best Places to Live article on Vienna. He's a Boston University graduate who feels morning coffee is non-negotiable.

Being able to guide my clients through many real estate sales, either moving out, moving in, or just across town, has been a rewarding experience that helps when discussing a plan with a future client.

Being able to help them focus and understand our proven sales plan always eases their anxiety of this looming personal task. And, putting it into bite-sized steps always helps them get where they really want to be.

My background… I’ve been an active licensed agent in Virginia for 25 years, work at TTR Sotheby’s International Realty in McLean, and sell homes in all price ranges. I donate to the town tree replacement fund, participate in a neighborhood citizens association, and try my best to stay in shape.

Questions? Email doug@dougfrancis.com or call me at (703) 304-6827 to discuss your plans. Cheers!

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About Doug Francis

I am a Realtor with TTR Sotheby's International Realty® just outside Washington D.C. in Northern Virginia. I have been a full-time Realtor licensed in Virginia since 1991, and cover a big territory specializing in the Vienna real estate market and custom homes for sale.

I have unique knowledge of digital real estate marketing ~ and my marketing starts here. My elite clientele has been attracted to my results-oriented strategy for years, and I am accepting new clients now.

Thanks for reading... and feel free to contact me at 703-304-6827 or send me an email at doug@dougfrancis.com anytime!

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TTR Sotheby's International Realty
6723 Whittier Avenue McLean, VA 22101

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