Luxury homes are among the most sought-after in the market, particularly in attractive areas like Jamaica Plains. Home to historic mansions, elegant condominiums, and modern houses, Jamaica Plains is surrounded by Boston's Emerald Necklace of parks, hyper-local stores, and fine dining options, homes for sale in Jamaica Plains attract so many eager buyers that bidding wars often break out for these treasures.
Bidding wars can be an advantage for anyone listing their home. Multiple offers give sellers more leverage at the bargaining table by driving up the price. However, there are still a few considerations that can help you when getting caught up in a bidding war.
Are bidding wars good for sellers?
It is not uncommon for homeowners to receive several offers on their house. However, a few offers do not constitute a bidding war. A bidding war happens when multiple offers begin streaming in over a short period of time. When housing inventory is low and demand is high, bidding wars are more likely to happen.
Bidding wars are not so advantageous for homebuyers. For sellers, though, having multiple offers provides them with the option to negotiate a higher price for their home. It also gives them a backup offer if one fails. Even with the advantages inherent for the seller, there are some ways to keep on top of the process and maintain the edge.
Make a comparison chart
An easy way to organize and keep track visually of all your offers is to create a spreadsheet. You can make columns for dates, offer amounts, buyers' names, contingencies, and loan pre-approval status. Seeing all the information in a document can give you a better view of which offers are the most promising.
A nice feature of spreadsheets is that you can organize them by date, amount, or any category that suits you. As information changes, you can easily change it on the spreadsheet. For instance, if a potential buyer who had not presented a loan pre-approval letter suddenly obtains one, you can note that on the spreadsheet. That one piece of information can change the valuation of that offer.
Cash offers carry weight
Cash offers carry many benefits to both the buyer and the seller. If you are selling your home and get a cash offer, you can count on a quicker transaction. When the buyer can forego the time and red tape usually involved in applying for a mortgage loan, you can get to the business of closing on the house faster.
Paying in cash means the buyer does not have to go through all the paper shuffling a mortgage lender requires. They may even be willing to waive an appraisal, which the lender would have required. Waiving the appraisal contingency not only hastens the process but also reduces the risk of the deal falling through if your home does not appraise for a higher price.
Consider escalation clauses
An escalation clause is presented by the buyer to compete with higher offers. A buyer can have this written into the contract as a provision that states their maximum spending limit and how much more they are willing to pay than the highest offer. This protects them if another potential buyer outbids them.
While an escalation clause can help the buyer from being outbid by the competition, it is also beneficial to the seller. As the seller, the clause shows you how serious the buyer is. However, there are some aspects that are not so favorable to consider.
An escalation clause prevents the buyer and seller from negotiating. Sellers can’t make counteroffers with other potential buyers once they accept the clause. While it seems that including an escalation clause in a real estate contract would make the buyer’s offer a certainty, it can actually have the opposite effect. If the buyer’s offer exceeds the appraisal value, they may not be able to get their loan, which could sabotage the deal.
Proof of pre-approval security
If you are dealing with multiple offers, prioritizing them can help you to choose more easily. The more certain an offer is, the more weight you can give them. If a buyer presents a letter of pre-approval, it can give you more security in accepting their offer.
As the seller, the potential buyers with a letter of pre-approval in hand when making their offers show that they have the financial backing behind them. Next to a cash offer, this is the best way to determine the value of an offer. Buyers who bring proof of pre-approval letter to the table are serious about buying your home and have the money to back up their offer.
Setting your price
Some sellers set their prices under the listing price to promote a bidding war. Putting up a low price to entice bidding wars is fine, but only if the sellers are willing to accept market prices. It is important for them to be willing to accept offers at their listing price.
It can be risky to set your price too low, but it is also a gamble to set it too high. If a home is listed too far over the listing price, it can turn away potential buyers or initiate low bids. Setting your sale price at the listing price is the most prudent option.
Enlist the help of an experienced real estate agent
The Jamaica Plain real estate market is still a seller’s market, but the market is cooling. The best way to get your house sold more quickly and easily is to enlist the help of a knowledgeable Boston real estate agent. A real estate agent knows the area and the housing market, and they can help you get the best offer for your home.
A skilled real estate agent can go beyond the MLS listing and find other sources to get your home sold. They have a more extensive pool of buyers from which to work. They can also eliminate unqualified buyers while negotiating your home sale.
Jamaica Plain real estate is highly desirable. Listing your home in this singular neighborhood may attract multiple offers. Deciding which offer to choose can be difficult, but there is a way to make the process go more smoothly. If you are ready to sell your Jamaica Plain home, contact the Prism Real Estate Group today and let one of their experienced agents get your home sold.