There are some important lessons that I have learned from online bidding that apply to a home buyer in a frenzied real estate market.
As the real estate market has heated up a bit this spring in the Minneapolis/St Paul metro area, buyers are seeing many more multiple bids on homes. Home buyers don’t always have time to think and process whether a home is a good buy or not before someone snatches it up. This can lead to questionable decisions at the last second.
Lessons Learned from Ebay
1. Know the Value Whether Ebay trinket or townhome in Hugo, you need to know the value of the item you are buying. Without research to know a good deal, there is a big risk of over spending on the item.
2. Read the Fine Print Sometimes the information in the description, or in the case of a home the disclosures, can help decide how aggressive your offer should be. Recently, I had a buyer excited about a property but after reviewing the previously listing information which mentioned severe mold in the home (but was not in the current disclosure) my client decided to pass on the home all together. Don’t forego your due diligence or you could have regrets.
3. Know Your Limit I have learned that in the last seconds of bidding, if I have not thought out what my absolute limit is on an item, I can risk overbidding and feeling ripped off. This also can happen in negotiating for a home. Some buyers just want to “win” the house but can feel buyer’s remorse as soon as the bidding war ends. It’s not a good feeling to overspend on a home. If you are financing the property, it will still have to appraise for the value. If it does not, you could lose the house if you do not have the funds to make up the difference.
4. It’s More Fun Solo As exciting as an auction is, it is much more fun when you are the only interested party. Sometimes when I really want something, I will just pay the “buy it now” price. With a home, it is easier if you can get your offer in before everyone else and avoid the multiple-offer situation all together. So as a home buyer, it is important to be working with a REALTOR® to be updated on homes that meet your criteria, non-contingent on selling your current home and pre-approved for a loan. This way you can get in first and write up your offer on the best homes as soon as they hit the market. It is good to be the only offer on the table.
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