Plotting to purchase

With bidding wars occurring over homes in popular neighborhoods, buyers and sellers are using various strategies to ensure they don't lose an opportunity

May 30, 1999|By Adele Evans | Adele Evans,SPECIAL TO THE SUN

The Nickel family knew it was the house they wanted to live in for the rest of their lives -- but when they found out that others were competing with them, it took more than desire to get the house. It took strategy.

"It was my third house. The house I wanted for the rest of my life," said Lee Nickel, a contract labor consultant. "I said to myself, `Are you willing to live with yourself [if you lose it over a couple of dollars]?' " His answer was "No."

Located in the hot-selling Phoenix community of northern Baltimore County, the Colonial home was listed at $359,900. With another bid on the table (the first bid and the Nickels' bid arrived within 12 hours of each other) and with a third expected, the Nickels essentially offered the list price at $360,000. Not only did they agree to go slightly higher than the list price, the contract they submitted didn't contain contingencies on selling their house or a delayed settlement date.

The listing agent presented the bids simultaneously to the seller and the Nickels came out the winners.

"[My agent] told me to make up my mind quickly. You get one shot. They can refuse both bids or take one. I put my best food forward," Nickel said.

A buyer strategy that worked perfectly.

The strategy at a Guilford home was to titillate the buyers and get the best price in an auction-like manner.

The seller's agent entered the home into the multiple list April 5 -- a Monday -- for $619,500 with remarks that it would be open for inspection from noon to 4 p.m. Thursday. According to one agent familiar with the transaction, all bids were expected to be submitted by 6 p.m. Friday.

"There were a boatload of people streaming through there at the same time," said the agent. On Saturday, the winning bid registered at $714,000. Total time on the market: five days.

In Bel Air, Elaine Macko also pulled out the stops when a Cape Cod home she coveted went on the market.

"When I got there [to the open house], there were lines of Realtors with their clients -- like a yard sale," Macko said. "Appointments overlapped. There were still four or five cars there when I left."

She had to plan fast.

Four other bidders were competing, but she had her present home to sell -- a negative in this kind of market. To gain an edge, she bid higher than the $163,900 asking price. She also offered a contract with no contingencies, a risk since she could be liable for two mortgages if her offer was accepted and she was unable to sell her present home by settlement.

She took the risk and got the home. Her property sold two weeks after she submitted her contract.

"Let's face it, someone else could have a clean contract. Now it's a matter of price," Macko said. "You have to be prepared. It depends on how much you want the house, but be ready to up the ante."

With bidding wars flaring up in such popular pockets as Phoenix, Bel Air, Roland Park, Guilford, Canton, Homeland and the Falls Road corridor, buyers and sellers are employing various tactics to ensure they come out on top.

It can be a fine line to tread. Factors such as money, financing, emotion, confidentiality, fairness, legalities, reputation and professionalism are at stake. Definite strategies are required for all parties to leave the settlement table feeling good about the process.

Seller strategies

While sellers do have an advantage in these situations, it's critical that fairness is maintained and that sellers never "shop the bids," says Karen Bisbee, vice president and associate broker at O'Conor, Piper & Flynn ERA and a specialist in high-end properties. Bisbee has seen as many as seven bids made on one home.

Her mother and partner, Nancy Hubble, said she recently took a customer to a home in Ruxton where the agent told them there were five bids on the home.

"We stood in front of the house and the [buyer] said to me, `What do you think we need to bid over asking price to get this house?'

"I said to her, `Five thousand over asking price is not going to do it. You're gambling because no one knows what any of the other contracts are.'

"I told her buyers need to decide what they are willing to pay sensibly and based on how bad they want the house. And before we left we were talking about the house, which was [listed at $538,000], and we were talking giving $550,000. Now that is pretty incredible."

Hubble said the buyer decided against offering that much.

As a strategy, if the seller opens the first bid and then hesitates, he can appear to be waiting for something better and it can destroy a deal, create buyer resentment, and cause the house to linger on the block, Bisbee said.

"Many buyers pull their offers if they think the seller is waiting [for better]," Bisbee said.

"Twenty-four hours, max," says Re/Max Preferred broker-owner Doug Poole. "If they [the sellers] sit on it, I want to know why. If I get the feeling the seller is waiting for something better, I call my buyer and we may tell them [the sellers] to respond by midnight or the offer is withdrawn."

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