RISMEDIA, Sept. 18, 2007-(MCT)-The bidding wars of the boom real estate market were the stuff of legends.
But bidding wars — multiple offers from competing bidders — still happen in this slow New Jersey market.
The difference is, the bidding wars don’t occur within hours of when a property goes onto the market.
Nowadays, they are more likely to occur when the seller finally reduces the listing price to the point where the house is perceived by buyers to be a good value.
Elizabeth Dunkel calls that point the “sweet spot.”
She should know. She had to decide among competing bidders for the purchase of her late mother’s Tenafly home.
The house was put up for sale on the market in late September 2006. “The house hadn’t been on the market since 1953,” she said. “Tenafly is a very desirable town. It went on at $810,000. The house was correctly priced for about one minute.”
People were looking, but no one was making an offer, except for one prospective buyer who bid $700,000 and then upped his bid to $720,000. Dunkel didn’t take that bid seriously, and initially felt certain she could get a higher price.
“You can have pride and think your house is worth all this money, but I had to face the reality,” she said. “If I wanted to hold the house for two more years, I might get my $810,000, but what would I have spent in heating and insurance and paying high Tenafly taxes on an empty house? I just had to bite the bullet.”
So she and her real estate agent, Bob Clarke of Classic Realty Group in Tenafly, started dropping the price progressively: $795,000, $775,000, $750,000, $735,000 and finally $699,000 in May.
“Literally, the day it went to $699,000, the offers started coming in,” said Dunkel. “I got the first offer, and before I signed anything, someone made a second offer. The people who made the third offer were told there were other offers.”
Clarke said, “We went back and told everybody we had multiple offers in the same range. We set a deadline of a couple of days and asked the bidders for their best and highest offer.”
Meanwhile, Clarke was calling the mortgage lenders on the bidders’ pre-approval letters and checking to make sure the pre-approvals were solid.
Dunkel accepted the highest offer, which was about $6,000 over the final list price. After the home inspection, that price was renegotiated to slightly below the list price.
“Really what I’m seeing from buyers in this market is that it’s about value,” said Clarke. “It’s not affordability. Buyers want good value when they compare the home to other homes that have sold recently, whether upgrades have been made to the property or not.”
Beth Popper with Coldwell Banker of Alpine/Closter represented a buyer in a four-way competitive bidding situation in Fair Lawn. This home had been extensively upgraded, but it languished on the market until the price hit the sweet spot.
“The best way to get an edge as a buyer in a competitive bidding situation is to offer the asking price,” Popper said. “If they have a higher offer, generally speaking, on principle they will let you know about the higher offer, and give you the opportunity to beat it.”
Or, said Popper, you might want to bid slightly over the asking price (something like $1,000 extra), which might well make your offer the highest one.
Another element that apparently cemented the seller’s decision to accept the bid of Popper’s client was the strength of the mortgage preapproval. Just about every bidder nowadays has a mortgage preapproval letter, but not all mortgage companies are dependable. Let the seller beware.
“My client’s lender has a reputation for preapprovals that are set in stone,” said Popper, “and that pushed her into top running, although her offer was either tied with or a little bit under the other top offer.”
Lorrie DeZerga, an agent with the Century 21 Marie K. Butler Agency, faced a bidding war on a home she listed on Beverly Road in Oradell. The home was previously listed with another agent at a higher price.
“It’s the least expensive home in Oradell,” said DeZerga. “It was so well-priced for Oradell that we had 57 people come through for the first open house.”
In short order, she had three bids to present to the seller.
“The highest offer is not necessarily the best offer,” she said. “The seller will also consider the amount of the down payment and the closing date, among other things.”
Alas, the bidder chosen by the Beverly Road homeowner asked for further price concessions after the home inspection, and the deal fell apart. The home is back on the market for $350,000.
DeZerga said she gives prospective buyers lists of comparable homes that have sold recently so they have the most current basis on which to make their offer.
And she said it might also tip the scales for the bidder to write a personal letter to the seller.
“You might say why you like the house, or that you’re from the town, or grew up in town,” she said.
One bidder did a variant of that on another home being shown by Popper.
“This thing was unbelievable,” said Popper. “This person offered the asking price, but before we made the official offer, he wrote his offer on a piece of paper, put it in an envelope, walked up to the front door and handed it to the sellers.”
Mr. Handwritten Offer got the house. The deal closed this month.
Copyright © 2007, The Record, Hackensack, N.J.
Distributed by McClatchy-Tribune Information Services.