Why Do I Keep Getting Outbid in a Buyer’s Market?
The headlines all scream, “No one’s buying,” “Homes are sitting on the market,” “Great buyer’s market.” So you take a deep breath, embrace your inner contrarian and decide to buy when everyone else is selling. You make an offer on an entry-level home and realize that, apparently, someone else read the paper and decided to buy now too, because there are 14 other offers, and you get outbid. Thinking that’s a fluke, you try again, and get outbid again. And then again.
I Know the Feeling. Losing one or two homes to multiple, competitive offers is just par for the homebuying course and can happen to anyone in either a buyer’s or a seller’s market. Lose more than that and panic starts to set in. Have you already been priced out of the best buying opportunity ever?
Your Mindset Reset. Don’t freak out. Yes, some areas have already bottomed out, but there are many good deals to be had almost everywhere. In most areas, the buyer’s market has moved the entry level price point significantly lower. For this reason, there is a lot of activity in that price range, and increasingly, multiple offers on homes in nice neighborhoods and good condition.
Ditch the panic and fear that you've missed out. That’s the quickest way to become a desperate house hunter, which can cause you to make impulsive and just plain wrong decisions -- unwise compromises, settling for the wrong place or even throwing money at a home that’s not really worth it.
Your Drama-Free Real Estate Rx. If you have been outbid several times, take the following steps to break the cycle:
- Stop making lowball offers. You have good taste, right? Okay, then if you like a house, it’s not that bizarre that someone else will too! If you are making offers on a very desirable property or one that has just come on the market, you might need to make an offer at or even above (gasp!) the asking price! When you compare even an over-asking offer to what you might have had to pay for the same property several years ago, you’ll see that the value is still there.
- Rethink what your “market” is and rely on your Realtor’s local market knowledge. Real estate markets are super local. That just means that market dynamics, like overbidding and multiple offers, vary from state to state, city to city, and even by neighborhood within the same city. Don’t use the national news to direct your offer strategies. Look to your Realtor to see what is going on in the neighborhoods that you like. Before you make the next offer blind, ask your Realtor to find out from the listing agent if there are multiple offers, how many there are and what offer points are particularly attractive to the seller.
- Reevaluate your house hunting strategy. Analyze the recent sales that you lost out on, with your Realtor’s help. How many days were those homes on the market? How high over asking did they go for? Look at homes in a lower price range or be willing to offer more in your current range to be competitive in a multiple offer situation.
- Redefine success. Recently, buyers started defining successful homebuying by saving thousands of dollars off the asking price -- an asking price which was totally abstract and set by the seller in the first place! Recently, sellers have gotten more realistic about pricing and buyer demand has started to creep up. So, get -- and stay -- clear on what success would mean to you. Do you have to pay less than asking to be successful? Or do you just want to obtain a property that suits your family at an affordable price and with a mortgage that you can sustain over the long term?
You can be a bull-headed wanna-be homebuyer for many moons and end up priced out of the market when your lowball offers continue to get outbid, or you can be a happy homeowner because you get out of your own way and implement a house hunting and offer strategy that is based on the facts of your local market. You choose!