If you bid too little, you could lose out on a great place. If your bid is too high, you’ll always wonder if you could have gotten a better deal.
Tricks of bidding
Time is of the essence. Once you find a unit you love, your broker will quickly gather comps and try to get a sense of how intense competition for the apartment may be. Don’t be surprised if you’re competing against several other buyers.
Bidding 10 percent under asking price might work in Florida or Texas, but in New York City’s red-hot market, it’s not uncommon for sellers to receive more than a dozen – or even two dozen – offers on a property. During the third quarter of 2014, nearly half of all Manhattan and Brooklyn apartment sales went for full asking price or above asking price — the most in five years.
Do not blindly wander into the bidding process. These tips won’t ensure your victory, but they may improve your odds in NYC’s housing wars.
Do your own research
Even before you allow yourself to fall in love with an apartment, do some research on the building and neighborhood. StreetEasy provides easy access to information about recent sales, sales-to-price ratios in certain neighborhoods and even former deals for individual apartments. When you attend open houses, take a look around. If you’re one of 150 people waiting for an open house to begin, chances are there’s a lot of interest in the property and that could easily translate to multiple bids.
Smart home hunters start talking to lenders as soon as they start thinking about buying a place. Your goal is to find a lender who, based upon your income, debt and credit information, will provide a pre-approval letter stating their preliminary determination that you will qualify for a specific loan amount under that lender’s guidelines. The preapproval will say how long it is valid and may contain some other conditions for you to get the loan.
Preapproval assures a seller that your offer is legitimate and that you can actually get the financing necessary to make the purchase.
Sweeten the pot
If a condo requires a 10 percent down payment, you may be able to win the bidding war by offering just 2 percent to 5 percent more.
You may also consider waiving contingencies. A mortgage contingency, for example, gives a buyer the option of backing out if they can’t get financing within a specified time period. If they back out, they can take their down payment with them. In a competitive market, a seller may ask potential buyers to waive this contingency. It can be a risky move for a buyer; delayed or denied financing means you’ll likely lose your down payment.
Write a letter
In a crowded marketplace, it’s important to do whatever it takes to stand out from the crowd. Writing a heartfelt letter to the seller may be that extra something that gets your bid noticed.
Sincerely tell the seller how much you love the unit and how you envision you will be living there. Be honest, but humble. If your offer is identical to another, your thoughtful words could be enough for the seller to lean your way.
Know your limits
Especially if you’ve already lost out in a couple of bidding wars, it’s important not to let your frustration get the best of you – or your budget.
What’s the most you can afford to spend on your new home? Keep that dollar figure in mind and don’t allow yourself to exceed it or you could end up buying a home you really can’t afford. Make bids with your head, not your heart.
Find Your NYC Apartment
StreetEasy has the largest set of real estate listings for New York City