I had to call a buyer this evening and tell them theirs wasn’t the winning bid on a house. It’s never fun to be the one to deliver the news that pulls the plug on all the plans they’ve been dreaming up.
Bidding on a home is just one of the steps toward market discovery. The stages might start innocently enough by browsing real estate sites during a slow time at work. Even though this low-touch method provides limited information, some bigger-picture decisions may start to formulate. Such as the realization that certain areas are simply too expensive, or others are too far from work.
Next buyers get in their cars and go tour homes during open houses. Or sometimes they start right away by meeting a realtor at properties. This step is more structured as basic parameters have been set both in the physical nature of the home but also in price. As the process continues, a third decision criterion emerges. It concerns the number of repairs or upgrades the buyers are willing to take on.
At some point, the buyer will find a home that interests them enough to make an offer. If they are the sole bidder then the discovery only involves the expectations of the seller. If there are multiple bids on the property, such as in this recent situation, then the offer process is much more thorny. Being the highest offer can be a means of winning the house but not necessarily. Terms matter as well.
In this case, there were eight bids in total. Usually, at this level of interest, at least one party that goes for broke, bidding high and giving up the inspection contingency. This market participant requires a tolerance for higher risk. It’s by going through the process that buyers discover their tolerances for not only price but terms of the purchase. Or they adjust them to compete in the market.