How do you go about starting a "bidding war" over a house? Unlike an auction, the other bidders aren't privy to other offers. Or does the realtor keep passing along the highest offer to the other realtors?

I'm just too cheap for that approach. Our house was the cheapest sale in our neighborhood by an easy $40k (over the last 5 years), despite being fairly large for the area. The house next door is currently for sale for 150% of what we paid for our house, and it's slightly bigger and fairly dated. I'm pretty certain (based on comps) that after I finish my basement and remodel the rest of the home we could make out pretty well.

You make your best offer and hope you get it. After your deadline for a response passes and you haven't heard back, you can assume you didn't get it. If your offer is in the ballpark, the listing agent might call your agent and ask if that's really your best offer. The seller doesn't have to accept any of them. He can sit back and wait until the right one comes along, you know, all cash for 30% over asking, can close immediately, no inspection or appraisal required. We got an offer accepted on a house that was listed for around $312k, IIRC. We offered $320k. There were 15 other offers on that house in one day and the seller was getting tired of having cars lined up outside his house, waiting to see it.....on the first day. So he took our offer. He probably could have gotten more if he'd wanted to wait longer. If you don't want a house that badly, then stay a renter or move somewhere that has a buyer's market.

Was the pre or post real estate bubble? I'm probably better off for living in bubble free KS, I don't think I could handle paying over asking price.

That was June 29th of this year and in North Scottsdale. The house was way, way underpriced and a short sale and it was almost walking distance from my wife's office. I was on the road and couldn't go see it, but told her to make an offer if it had a three car garage and she liked it that much. Now, it turns out we won't get the house because the bank screwed up the paperwork and had to start the short sale approval all over again, meanwhile the seller abandoned the place and the pool is now a green algae petri dish. But still, some investor who can pay cash is gonna scoop that house up, fix it and have himself a nice house in a nice zip code.

Our second choice house is in Cave Creek and is lender owned, but in pristine condition. It has been sold and fallen through at least twice since we first saw it. Our offer is in second position now. They were asking $312k and we offered $318k, asking for 3% seller help. Winning bidder is having financing issues and we have a good chance of getting it when his deadline expires.

Why would you EVER get into a bidding war over a house? Especially now?

Because I want to buy a house and that's how it's done in the nice areas. Offering 2-3% over asking is not at all excessive and it made the difference between getting ignored and getting the offer accepted. FWIW, all these houses are selling for around 40% of what they sold for during the peak.

Yeah but honestly who cares. A house is a house, ultimately. If I really cared THAT much about it, I'd be designing/building my own place (and I will someday), not buying someone else's used goods. It's just like shopping for a car - if you make the mistakes of either (1) falling in love with it or (2) wanting it right now, you get BONED on the price tag. There were a couple of places where we were told "you have a competing offer", to which my response was (unfailingly), "then withdraw our offer, I'm no longer interested". I'm not getting roped into that - the other people can have it if it's that important to them. No way. Funny part is on two of the places (I think this happened on five, I'll have to check my records) the same properties were relisted later - I guess those "other people" either didn't really exist or wanted out. Take that for what it's worth... The other game they'll play with you is a counter offer saying "please submit your highest/final offer". The "correct" response to that is "you already have it". It's just an attempt to jerk you around by your insecurity and pump the price tag. Don't get taken by it.

Patience in this sort of game will save you an awful lot of scratch long-term. But everyone's priorities are different. YMMV.

FWIW I'll be (probably) getting back into the market once I get situated back east so maybe beginning to middle of next year (depending on how long it takes to rebuild my finances after having been un/under employed for so long). I'm not worried though. Eventually an opportunity will present itself and I'll move on it when it does. I'm not going to rush into anything. Doing so almost always results in making someone else rich at your expense.

Building your own house in this kind of market would be the worst thing you could do unless money is no object, you're in no hurry at all and don't care if the neighborhood ever takes off. There are so many deals to be had. Why not snatch one up? When most of the houses we're looking at 1) are priced at around half of their price at the peak, 2) cut my wife's commute down by more than half, 3) have a mortgage payment about the same as the rent we're paying, 4) have a pool and a three car garage, well, that's when I think it's time to buy. Staying here keeps my wife's commute the same, keeps paying the landlord's mortgage, doesn't build any equity and doesn't feel like home. It's time to buy for us.

Long answer: Most people DO want to fall in love though. And when you do, you don't feel "boned" if you get the house at a price you can live with, even if it's over the asking price.

I've been in two multiple offer situations in the past month. One was on a 125k starter home that really should have been listed at 135k, but the realtor (nice enough fellah) didn't have a clue. I had a buyer, and when it went multiple he just couldn't bring himself to put in a solid offer. Came in at 128, someone else got it for 131. My buyer later agreed that if ity had been listed at 138, he'd have gladly offered 135.

Another one was just last week. A house that was previously listed at 275k, now listed for 235k. This is a nice older house in a desireable (350-450k) neighborhood, but it's had serious "deferred maintenance" and needs some love. 50-75k and you'd have a 425k house... maybe 25-35k if someone did drywall and windows themselves. Anyway, house gets tons of traffic but no offers, until one of my buyers puts in a wacky lowball... that frees up the logjam and offers start piling in. Strangely, even with multiple offers it doesn't get within 95% of asking, and all are refused. I have another buyer waiting that one out.

Anyway, my point is that the asking price isn't nearly as important as the value determined by the market. It's no different than buying cars. We all like to dicker and feel we got a "deal", but if you see a 69 911s for 76 911s money, you'd pay asking or MORE if you knew the next buyer coming along was knowledgeable enough to offer more.

Short answer: It depends.

Tell me a little about that. My agent suggested that also, but my brain was in lala land (stress about a huge remodel job going on else where) when she talked about selling once its fixed up. I am a long way from that. At least 2 months. She claims I will get muti bidding war for sure. This is my first flip and I am in a really nice area up in the hills with homes that are built in the 30-50s. Avarage price for a 3+2 is 550-650+K.

I have gutted the house completely except the bed rooms. Putting in custom kitchen and bath. Not custom one purchase, but custom build in our shop. Everyone thinks I am doing too much? It will be one of the very few homes design and build like that in the for sale market in the area. Most are just a coat of paint. What do yout think?

Jeff

IMO at least in this area, I looked at places (starter homes) 120 to 155k I walked into and back out of almost every single one of them thinking yeah right this S$#@ hole is worth like 80. Or worse on some of them thinking it needed to be torn down.

The offer I made is likely going to be rejected or ignored which means I will continue renting. I have a hard time understanding how people can let a house go like some that I looked at and still think its worth X amount of money.

There is the phrase: "buy the cheapest house in the most expensive neighborhood" for stability and resale, but it all depends on the buyers, their immediate lifestyle needs, and long term goals.

One thing to watch out for is that expensive neighborhoods might have higher tax implications from the city appraiser, irregardless of actual property value.

Totally understand your point. It's far cheaper to buy a used home, than to buy a plot of land and then pay to build a new house on it.

At the same time, as someone who's been looking over the past year to purchase a place, I've found it's been exceedingly rare to find a place I actually really want. I've looked at easily 80 homes that fit my basic search parameters. I think maybe only 2 or 3 have been homes where I said "Wow! This place is perfect for me!" (And all of those places went for a touch more than my budget allowed.) Maybe I'm too picky, but there are a lot of ridiculous floorplans out there, where stuff clearly doesn't "flow." There's something to be said for building a place to YOUR specs/design.

If you have the time and money to build your own, of course, it's a great way to go. But nothing ever happens on schedule or budget.

I remember doing a lot loan for a good bank customer once, who said he eventually wanted to build a log home there. Lot loan closed fine. He then got a log home kit and a builder all lined up. The builder called and asked me to fax over a copy of the buyer's mortgage approval and said he could get the driveway cut and paved on his own before he needed any draws, just wanted to see a mortgage commitment before he broke ground. No prob. I faxed it over, he broke ground on the driveway. A week later my boss tells me we can't do log home (anymore) and I'll have to refer it to another bank.

Another one was a lot loan with around 40% down, borrower has an 816 FICO and $500k in the bank after the transaction. Land didn't perc, but I had a letter from the local county water auth. saying they were running a main out there for the eventualy deveopment. I handed it to the underwriter, she approved the loan. Day before settlement the VP of the bank calls me up and says, "Richard, this loan is hereby denied for colateral reasons. Land doesn't perk. Have a nice day. Goodbye."

That was the kind of bank I worked for and I'll guess it's a lot hairier these days.

That's because its LA. It has lots of olders homes from the 20s-70s. Some of the design just doesn't flow, but it was the style of the time. My parents home for example, Regular 3+2 spanish from the 20s. It has a 10'+ ceiling and huge Living Rm (300+sq'), and good size Bining and Bed rooms, but the kitchen is small ( some 2+1 condos are bigger) with a seperate laundry room that's half the size of the original kitchen. That's the way it goes. I always tell people, buy a house on the cheap and fix or remodel it to your liking and you will come out ahead. Emotionally because its to your liking. It is very hard for people to understand that. My buddy and his wife just went through it. They bought in Glendale, Chevy Chase hills for a little 800k, now, she doesn't like the floor plan and kicks herself everyday after she sees my flip from the get go.

The first home is always hard. There's no such thing as the perfect (old/use) house. Gotta go, be back later.

Jeff

I'm not real ballsy when it comes to underpricing, but I have done it a couple times this year when there were REALLY similar homes listed nearby, and the homeowner was anxious to sell. We actually went out to see the other places, and then priced hers at 5% under the one that was most like hers. Sold it in two weeks.

Another one was just a couple weeks ago. Had a townhouse in an area where there were 4 on the market for 135-140. Listed his for 129,900, got a TON of traffic, multiple offers and sold it for 134 within a week or so. It wasn't quite as nice as the one listed for 135, but people get hairy when they see good value. Bumping the seller's commission helps too, gets the other agents anxious to show yours.

Hard to say. I guess the best answer is "it depends". Sometimes a quick coat of paint, some new fixtures and maybe some flooring is the best, safest bet. Really depends on what people expect to see in the neighborhood, at that price. I have a friend who's doing his first flip and he's going WAY too far. It's an average house and they are doing high-end work to it. He bought it for 170 and is trying to make a 240k house out it, but it's in a ~200k neighborhood. If you make your house exceptional, you'll have to wait for an exceptional buyer.