Do You Recognize the Early Signs of a Bidding War?

Buying a home in the Nashville area can be an exhilarating experience. Whether you are searching for condos for sale in downtown Nashville or houses for sale in Green Hills, Tenn., nothing beats the rush of finding your dream home in your ideal neighborhood here in the Nashville area. Yet, with a red-hot real estate market comes more competition.

If you have your eye on a particular property, you are probably not the only interested party. For especially desirable houses, you are likely to enter a bidding war. So how do you know you are in a bidding war, and, more importantly, how do you navigate a bidding war? Here are the early signs of a bidding war and what you can do if you find yourself in a bidding war.

Like every other type of investment, real estate’s value is cyclical. Whether you can find a reasonable home deal or are paying top dollar for a home largely depends on market conditions. At times, the market caters to buyers, while at other times, it heavily favors sellers.

Whether you are in a buyer or seller’s market depends on many factors, and demand is one of the most significant factors. If there is not a lot of demand for real estate due to the local economy or other factors, or if there is more inventory than there is demand, then chances are you are in a buyer’s market. This also works in reverse. The more demand there is for real estate, the higher the asking price is for real estate. Coupled with limited inventory, high demand usually means you are in a seller’s market.

In recent years, many real estate markets throughout the country have seen unprecedented demand for real estate. With historically low interest rates, more Millennials reaching the age of homeownership, and more workers working remotely than ever, prospective buyers are branching out to other areas of the country, including Nashville, in search of the perfect home. As a result, Nashville has a strong seller’s market where buyers are far more likely to compete against one another for the best properties.

Similar to market conditions, one of the most considerable driving forces behind bidding wars is a property’s location. If you are searching for downtown Nashville real estate, you are searching for a home in one of the country’s most desirable areas. Of course, the demand for luxury real estate in Tennessee extends beyond Broadway to Nashville’s suburban areas, such as Williamson and Franklin Counties. Williamson County is one of the fastest-growing counties in the country, and real estate in the rest of the Nashville area is also in high demand.

When searching for property in a desirable area, such as Green Hill, Arrington, or Belle Meade, your chances of entering a bidding war for a new home go up significantly, which can drive the prices of area homes up even more. It’s a vicious cycle many buyers find themselves in, which can be incredibly frustrating.

Along with the property’s location and current market conditions, pricing is one of the biggest drivers behind buyer demand. When a home is priced at or below market value, chances are you will enter a bidding war with other buyers, which can lead to the sellers accepting an offer that is well above the asking price (by five or six figures).

When you are in that situation and want to live in a particular house, you must mentally prepare to make a firm offer above the asking price. Whether or not you win the bidding war, being part of multiple bidding wars can be incredibly stressful, even for the most competitive buyers.

So how do you know if the property is priced competitively? And how do you navigate a bidding war? If the property is in foreclosure or is a short sale, then chances are it is priced well below market value as a way to push the deal through faster. Properties might also be priced below market value simply to increase prices (this is especially true for investment properties or properties that were recently flipped).

If you find a deal that seems too good to be true, someone else probably noticed. And if you and your agent anticipate you might be part of a bidding war, place your best offer forward, then reevaluate.

If the property makes a lasting first impression, its owner likely will receive multiple offers. In other words, if the listing has professional photography/videography, has been professionally staged, and everything is clean and new, it will attract more buyers.

Conversely, buyers tend to be scared off by messy, cramped, or dated properties. If a property is turn-key and in excellent condition, more prospective buyers will be interested in submitting an offer. If you are also drawn to the turn-key property in a desirable neighborhood, then be prepared for a bidding war. To increase your chances of securing the property, offer more than the original asking price and make your offer as attractive as possible.

A little-known fact: Buyers want what other buyers want. This is why many turn-key homes in good neighborhoods have multiple offers, especially when competitively priced in a red-hot real estate market. So how do you know that the next property you are looking at will likely have multiple bids?

Look at the age of the listing. If a reasonably priced property in excellent condition and a desirable neighborhood just came on the market, it will not stay on the market long. If you have no interest in joining a bidding war but want to stay in your ideal community, look at the older listings. If a listing is older, most buyers assume something is wrong with the property and are far less likely to bid on it. You and your agent will have more leverage in your initial offer, which can net you a better deal than bidding on a brand-new listing.

Ready to begin your search for downtown Nashville homes for sale? Janelle Waggener is your trusted real estate expert in the Nashville area. Whether you are buying your first house or your forever home, trust Janelle to find your dream home. Contact Janelle today to get started on your real estate journey.