The Real Cost of a Bidding War
Winning a bidding war feels like a win. Sometimes it's actually the most expensive mistake a buyer makes all year, and most people don't realize it until months after closing.
What a Bidding War Actually Costs
The final sale price is only part of the story. Winning often means agreeing to cover an appraisal gap out of pocket if the home doesn't appraise at the offer price, waiving the inspection contingency, or agreeing to a rushed closing timeline that doesn't leave room to think. It often feels like you won big at the craps table only to realize most of your winnings are going to taxes.
The Other Side of the Coin The buyer’s market we’re currently in (did you know we’re at an all time inventory high across the country right now?) is truly that: a buyer’s market. We often see this paradox occur during buyer’s markets where buyers end up getting analysis paralysis because there is so much inventory to see as well as become overly confident in taking the sellers out at the knees.
Examples of the mind-boggling yet very frequent tactics buyers feel entitled to when it’s a buyer’s market that we cringe at as realtors:
low-balling
low-balling plus asking for concessions
The mindset that the seller owes them because they only paid X amount for the home 10 years ago
Creating an amalgam of the 40 homes they’ve seen and believing it’s still somehow eluding them (honey…it’s not.)
Wanting the sellers to pay for every small item on the inspection report
Expecting the agents to sacrifice their compensation during the negotiations
Sleeping on it to give the seller the illusion that they don’t like the home (guess what, by tomorrow, that home you love is suddenly going to be under contract with someone else)
Buyers’ entitlement/delusional expectations ironically are highest during a strong buyer’s market, so by the time the market has shifted back to a seller’s market, the buyers are left on the curb because they didn’t act quick enough and now not only do they not have a box-checking home for themselves, they’ve also given up most of their negotiation power and it’s the seller’s turn to stick their nose up at terms that aren’t desirable enough for them.
When Multiple Offers Are Actually Happening
Not every property draws a bidding war, and not every market is doing this right now. But in the right neighborhoods, at the right price point, it's still common enough that buyers need a plan before they're in the middle of one, not after. Even when there is a lot of inventory, it’s a safe bet to stick to the rule of thumb that if you love it, someone else who loves it probably toured it 15 minutes before you. A well-priced home with clear assets is going to stand out among the crowd. And all the buyers who’ve been just as fickle as you are going to shoot their shot as well.
When Pushing Through Makes Sense
The property genuinely fits a need you won't easily find again (school district, lot size, view, layout)
You've already run the numbers on an appraisal gap and you're comfortable covering it in cash if needed
You're protecting yourself with the semantics of an “as-is” purchase being expressed in the offer email, but you’re not actually waiving your inspections
You feel comfortable with the terms the sellers is asking of you (your agent should always call the listing agent and ask if there are any circumstances that would make the sellers happy in an offer). ex. They need a longer close in order to complete the purchase of their new home, they want earnest money to go hard right after contract acceptance, etc.
When Walking Away Is the Smarter Move
You're waiving contingencies purely out of panic, not strategy
The comps don't support the number you'd need to offer to win
You'd be stretching your budget past what feels sustainable a year from now
The age of the home is fodder for structural issues
The location of the home could pose issues with insurance
The Question That Matters More Than the Price
Before writing an offer in a competitive situation, ask yourself: am I bidding on this house, or am I bidding against my own fear of missing out? Those are two very different offers.
Winning matters less than winning the right way. A house is still a math problem before it's an emotional one, even when it doesn't feel like it in the moment.
Thinking about making an offer on something competitive? Call or text me at 928.853.7176 and let's run the numbers together before you commit to a number you can't take back.