Bidding strategy

lkbob

To give a background, I am a first time buyer who has bid on two properties in the last 6 months, but lost out on both due to bidding wars. I have viewed a property this week that I absolutely love, it ticks 100% of the boxes for me, more so even than the two I bid on previously.

The property in my opinion is fairly priced, and is what I would expect it to be worth based on similar properties on the property price register. I am prepared to pay the asking price and possibly some more. I would be confident the property will sell easily and won't go for less than asking, it's in an area where there is big demand for family homes & close to a major city.

Just wondered if anyone had any opinions on the best way to approach the bidding? As it's just on the market there are no offers as yet. I don't know whether to start low, and end up in a bidding war again where we end up slowly making our way up to asking price, or to just bid the asking price, with the risk that I then set a floor for higher bidding. Some have suggested I offer the asking price and ask that the property be taken off market, but I think based on demand in the area, the seller won't want to do that.

Any opinions welcome, I really don't want to miss out on this house!

P. Breathnach

Your last sentence indicates your potential weakness: you might be too keen for your own good.

If you truly believe that the asking price is in line with the market value, then you might be dealing with a fairly straight seller who is not into playing mindgames (I did say "might"). I'd suggest that you make a bid fairly close to what you think the house is worth, perhaps €10k below asking.

If a genuine bidding war ensues, then step back, perhaps even walk away.

If it looks to you as if a phony bidding war is created, then play it slowly and carefully. Take several days, make a show of trying hard to raise some more money, and then come back with your final offer, saying that if the price goes higher you simply cannot find the funds to compete. Be prepared to walk.

lkbob

P. Breathnach wrote: »

Your last sentence indicates your potential weakness: you might be too keen for your own good.

If you truly believe that the asking price is in line with the market value, then you might be dealing with a fairly straight seller who is not into playing mindgames (I did say "might"). I'd suggest that you make a bid fairly close to what you think the house is worth, perhaps €10k below asking.

If a genuine bidding war ensues, then step back, perhaps even walk away.

If it looks to you as if a phony bidding war is created, then play it slowly and carefully. Take several days, make a show of trying hard to raise some more money, and then come back with your final offer, saying that if the price goes higher you simply cannot find the funds to compete. Be prepared to walk.

Thanks for the reply. Agreed, I have fallen for this house, but I have set a limit and am prepared to walk away if it comes to that. The last two houses I placed bids on ended up in crazy bidding wars, and eventually sold for significantly higher than I perceived them to be worth. Getting into a bidding war is a lengthly and stressful process, and I was always worried that I was bidding against myself (As evidenced by the PPR, that wasn't the case for these houses).

I guess I'm trying to avoid a bidding war starting, by bidding high enough to hopefully discourage other bidders...but not so high that I end up overpaying for the house...so hard to know how to play it

RATM

lkbob wrote: »

I guess I'm trying to avoid a bidding war starting, by bidding high enough to hopefully discourage other bidders...but not so high that I end up overpaying for the house...so hard to know how to play it

There is a school of thought in strategy to do exactly what you said, bidding it early and bidding it high enough to scare away any potential competition. Under certain conditions it is a better strategy than going in low and then up and up in increments against one or two other bidders. People get competitive and lose their sense of financial ratioanilty in those scenarios and (especially for males) the process becomes less about buying the right house at the right price and more about beating the other person.

However without knowing the location of the house it is difficult to say if bidding high and early is the correct strategy. It might well be the correct way to go in South County Dublin right now as (anecdotally at least) bidding wars have returned to that section of the market. But using the same strategy right now in somewhere like Cavan for instance would be pure insanity.

lkbob

RATM wrote: »

There is a school of thought in strategy to do exactly what you said, bidding it early and bidding it high enough to scare away any potential competition. Under certain conditions it is a better strategy than going in low and then up and up in increments against one or two other bidders. People get competitive and lose their sense of financial ratioanilty in those scenarios and (especially for males) the process becomes less about buying the right house at the right price and more about beating the other person.

However without knowing the location of the house it is difficult to say if bidding high and early is the correct strategy. It might well be the correct way to go in South County Dublin right now as (anecdotally at least) bidding wars have returned to that section of the market. But using the same strategy right now in somewhere like Cavan for instance would be pure insanity.

Thanks RATM, the property is in a popular area of Galway city, so I know it's not quite SCD in terms of bidding wars, but certainly from my experience, any decent property in the area I'm looking has seen a large amount of interest and multiple bidders. My thoughts at the moment are to go in at €10k under asking. Without wanting to give details on the house itself, my offer would still be high enough to perhaps discourage some of the competition but still slightly lower than I believe the house is worth or will sell for. Lets hope my plan works! :eek:

RATM

Hope it works out for you, let us know how you get on

lkbob

Just to update you, strategy is going ok sofar! I bid reasonably high, one other bidder (+2k), I upped my bid (+1k) and now have been the highest bidder for the last three weeks! Looks like other bidder came in at their max. My question now is, how do I put pressure on EA to close? He has told me vendor wants my offer +20k, but that being realistic, +10k would be reasonable. However, I have held my ground for the three weeks, don't agree with bidding against myself.

One thing in my favour, another house has come up in same estate. I have looked at it and it would also suit me, it's alot bigger than property A. Would be happy with either house. Have not bid on this one yet, but second viewing on Thursday and I intend to after that. Could I use this to put pressure on the first estate agent to close? Or would EA see me as less credible if I have bids on two houses?

P. Breathnach

Looking good.

I think you can afford to be direct with the EA, even to the point of telling him what you have told us here: that the other house suits you equally well, and if the vendor of the first house is not prepared to accept your offer then you will probably make an offer on the other house after the second viewing. That means that your current offer comes off the table.

Molzer2

So, how did it all work out?

lkbob

Molzer2 wrote: »

So, how did it all work out?

It worked out great! Didn't get the first house, vendor decided after several weeks not to sell, but placed a bid on the second bigger house (€5k under asking) and it was accepted after 3 weeks! Sale took 6 months to complete despite no banks being involved, but I've been in since january and am delighted with it. Took alot of patience and time but worked out in the end!

Molzer2

That's great, well done!