Bidding Wars in Manhattan's Real Estate Market

Bidding Wars in Manhattan's Real Estate Market

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Lessons for Buyers and Sellers Looking to Successfully Navigate Today's Competitive Landscape

Segments of Manhattan's residential real estate market continue to be competitive. The dearth of quality listings combined with a sophisticated buyer pool, record rental prices, and pent-up demand have made multiple bidding situations commonplace. When properly prepped and priced, multiple buyers routinely vie for the same properties, driving up prices and creating a frenzy of activity.
If you’re a buyer, it’s critical to understand how to structure and submit an offer that will be acceptable. If you're a seller, you need a strategy for distinguishing the many offers and choosing one "winner".

Here Are Five Tips to Help a Buyer and a Seller Win:

1. Work With an Experienced Real Estate Agent With a Great Reputation

A savvy buyer's agent can help navigate the bidding process and offer professional guidance on how to make a winning offer. He or she can also help identify properties that may not have as much competition, which could provide an advantage in the bidding process. A top seller’s agent will orchestrate and control the process and help determine which of the multiple buyers is likely to pay the most and make it to the closing table, with the least amount of drama. An agent with an excellent reputation for integrity and fair play will make all parties comfortable with the process.

2. Get Pre-approved for a Mortgage if You're a Buyer and Have Your Building Pre-approved if You're a Seller

Having the pre-approvals in place demonstrates to the other party that you're serious, and will save time and frustration for all in the long run.

3. Be Prepared to Act Quickly

Time is of the essence in a bidding war. The party prepared with the necessary paperwork and ready to pounce when the opportunity presents itself often wins out. A buyer should have a completed financial statement and the most recent tax return in hand. A seller must be able to promptly provide an offering plan, amendments, building financials, and the building application requirements. All parties should assemble their support team in advance. In addition to their broker and mortgage professional, an experienced real estate attorney and inspector (when applicable) are key players at this stage of the transaction. All parties and their professionals need to understand that having the contract signed without delay is in everyone's interest.

4. Make a Strong Offer or Counter Proposal

In a bidding war, the highest offer does not always win. (But - offering to pay the most money never hurts). Sellers consider other factors, such as the amount of the down payment, the closing timeline, the buyer's financial strength, the broker's professionalism, and responsiveness, and whether there are any contingencies. An agent can help a buyer submit a strong offer that takes all of these factors into account. This may include offering a larger down payment, waiving certain contingencies, or agreeing to a closing or occupancy timeline that meets the other party's needs. A buyer may get cold feet and pull out if the seller's vibes are discouraging or don't seem honest. Emotions and subtle innuendo are critical factors in a negotiation.

5. Avoid Emotional Attachment

It's important in a bidding war to remain slightly detached from the chosen property or a particular outcome. Keep these emotions in check until the war is won (but don't let the other side know that you're detached; the other side needs to know that you're 100% committed). A buyer needs to remember that if he or she loses out, the action plan is to continue looking and remain confident that the right property will come along. If a seller has a potential buyer drop out, remember that others have identified themselves as viable candidates and should be ready to step up, especially if parties have set realistic expectations.
By working with an experienced and well-respected team of professionals, getting pre-approved, acting quickly, making a strong offer or counteroffer, and keeping emotions in check, a buyer and seller can successfully navigate the multiple bidding process with confidence and increase the chances of bidding war victory.

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