A lot of people think that you have to outbid with 10%, but the truth is that there are no ground rules for this!
How much you have to bid on a home depends on different factors. I will tell you about the most important ones.
There is no such thing as the asking price
This is something I usually say to new seekers at my place in Haarlem. The asking price says nothing about what that home is worth and what we have to offer. I see homes that are put up for sale for € 325,000, of which I already know in advance that they are worth at least € 350,000. The realtor then praises this property extremely attractive to attract a lot of people and hopes to get big outliers in the bids.
A purchase realtor can see for you and determine how far the asking price deviates from the market value. This is because he has access to a database of all recently sold properties in the immediate area.
Is it a rural home in Zeeland where there is almost no competition, or is it a home in Haarlem, where the realtor has 70 viewings after 2 days? The bidding strategy and the required bidding budget varies enormously per region.
How long has the house been for sale
When a home comes up for sale, the first 2 weeks are crucial. Then most people come to have a look and if the interest is large enough, people start bidding against each other. If a home has been on the market for longer, the number of viewers is often very low. You often no longer have to pay the asking price or can even pay less than the asking price.
How busy is it, how many searchers are interested and willing to bid, how many bids there are already, how many viewings are still planned, etc. These are crucial factors from which I will estimate how much extra we need to bid on top of the asking price.
What would this home be worth to a number of appraisers? So what is the maximum appraisal value of this home. Again this is a question that your purchase realtor can answer. If a home really cannot be valued higher than € 410,000, then you should not pay for it. Everything above this amount, you will not get borrowed from a bank.
‘OK help, so….what do I need to do now to bid successfully?’
Bid successfully with FlorisVK:
- Rule number 1: Invest in a good purchase realtor. This ALWAYS pays of.
- Rule number 2: Do not look at the asking price, but look at the amount for which similar homes have been sold recently.
- Rule number 3: Make sure you know how much competition you have and how many bids there are and / or are expected. Is there someone else who will bid, or are there 10 others? Put yourself in the minds of your competitors and consider how much more you have to offer to stay ahead.
- Rule number 4: Ask the selling realtor what he thinks the maximum appraisal value is. This is a very handy trick, because with this you also know the max of the bidding range.
- Rule number 5: preferably do not do it yourself! So again: Hire that purchase realtor!