How to Lose a Bidding War (but Also How to Win One)

As much as I enjoy writing blog content – I enjoy sharing articles that are well written and pertinent. Please enjoy this article – and I’ve added my two cents in


How to Lose a Bidding War (but Also How to Win One)

It’s prime home buying and selling season, and if you’re looking to buy in an area with low inventory and high demand, you’re probably going to run face-first into a bidding war. After the housing crunch of 2008, they certainly went away for a while, but now a recent study has found bidding wars are back in force.


So here’s the question for buyers: Do you know how to handle a bidding war, or are you going to let that dream home get away? Here are all the things you can do wrong—so you know how to do it right.


Fail to realize you’re in a bidding war


A surefire way to lose a bidding war is to not realize there’s going to be one. So, how do you know?

First thing’s first: Know where you’re shopping. If you’re in one of the following markets—some of the hottest in the country, viewed two to seven times more often on our site than the national average—chances are, there’s going to be a bidding war:

Even if you’re not in one of those regions, the housing market remains tight nationwide (too many buyers, not enough inventory). So, observe your surroundings. How many people are at the open house?

“If it feels as though you’re at Grand Central Station at rush hour, chances are there will be a multiple-offers situation,” says Victoria Vinokur, an estate broker at Halstead Property in New York City.

Finally, if you’ve made an offer and your agent tells you they’ve heard of higher bids, “you now know you have competition,” says Susan MacDonald of Daniel Gale Sotheby’s International Realty in Garden City, NY.


On the San Francisco Bay Area – we are experience a severe housing shortage coupled with high demand. You can bet your bottom dollar if you are trying to buy property right now – you will be up against multiple offers.

Be completely disorganized 

Sellers want your offer to come in a crisp, easy-to-read package, not in a mis-autocorrected Snapchat. When you know you’re in a bidding war, says Vinokur, get answers to these questions:

  • Is there a deadline to submit offers?
  • Is there a specific offer format the seller wants to see?
  • Are there any other factors that might be important to the seller? Do he want a quick closing or a delayed one? Noncontingent financing offers? Does the seller want to stay in or rent the home until he can find another home (also known as a rent-back agreement)?


Now this is where The Caton Team comes in. We are proactive Realtors. So once a client tells us they are interested in a property – we pick up the phone and call the Sellers Agent. I ask the above questions and more. When possible, I get the disclosure package so my buyers can read them before we write an offer and therefore write a stronger offer knowing the condition of the property. Price is important – do not get me wrong – however a great offers encompasses more than just price. So The Caton Team makes sure to find out the sellers’ needs and wants and how our clients can fulfill them and find a happy medium.

Not asking these questions is a good way to get your offer rejected. You also want to know what the seller is looking for and if it lines up with what you’re willing to do.

“Have a clean, correct, and easily legible offer packet, with a pre-approval letter or proof of funds,” said Sepehr Niakin, a broker who owns in Miami. Add a cover letter, and don’t be afraid to get personal.

“Write a letter to the owners stating why you love the home,” Vinokur said. Make no mistake: This should not be a lighthearted letter—it should be well-written and sincere.

An effective cover letter should include these things:

  • An introduction complimenting the seller’s property
  • A second paragraph describing what you’re like—your job (a good one, we hope!), your family, your interests.
  • The third paragraph should describe how you envision your future in the property. For example: “We hope you will accept us—we would love to raise our kids here.”


We call the Offer Letter part of our Home Buyer toolbox. And ask each buyer to write on for each home they offer on. The power of a personal letter can move mountains and sometimes make the difference between an accepted offer or an overlooked one.

Part of each offer we present, The Caton Team always ensures the offer is well written, properly completed (after all it is a legally binding contact), pre-approval letter, proof of funds and a letter from the buyer along with a letter from The Caton team is attached. When at all possible we present the offer directly to the Seller and their Realtor. However, these days most offers are emailed in – so we also write an email letter outlining the offer and our clients strengths.


Make a lowball offer that doesn’t stand out 


In a hot market, don’t lowball to see if the seller will entertain your offer (that’s for the off-season). When crafting your bid, make it a strong figure—and make it a number that might stand out.

“Most offers will be in round numbers, so stand out by going to the next highest number with a 1 or a 6 at the end of it,” says Brian Horan, a broker with Home Buyers Marketing II in Los Angeles.


A lowball offer in this market screams one thing – the buyer is not serious, not working in reality and is wasting everyone’s time (ok that’s three things – but you get my point). The Caton Team will prepare a Comparative Market Analysis before we write the offer – so our buying clients can write their strongest offer and know what to expect.


Don’t sweeten the pot


When you’re competing with multiple offers, you have to come prepared. If you can pay with cash, that’s a huge plus—our experts agree it’s one of the best ways to win. But not everyone can do that. Get pre-approved so the seller knows you’re serious. If that’s not enough, sweeten the pot.

“Pay with cash if possible; if not, consider increasing the amount of your down payment,” said Sharon Voss, president of the Orlando Regional Realtor® Association.

You can also put down some substantial earnest money—“1% or greater,” says Lera Lasater Lee, a Realtor® with Briggs Freeman Sotheby’s International Realty in Dallas.

If you’re still dead-set on getting that home, you can also offer to pay the seller’s closing costs.


Cash is king – but not all of us have cash. Don’t let this sway you. A well-written offer, with a solid down payment, strong / competitive terms and supporting documentation is hard pressed to be overlooked. If you can swing more than 20% down, this will set you apart. And we always encourage our buyers to write a 3% earnest money deposit (the maximum protected in the contract).  Offering to pay the closings costs helps too – and part of those fees are possible tax write-offs.  Not bad..


Lose sight of your limits


It’s a fine line to walk, though––sweetening the pot can be helpful, but be careful not to get caught up in a buying frenzy. If you overpay for the house, did you really win? Take a step back and figure out a limit on how much you want to pay for that property.

You can go about this in two ways:

  • Make your best offer upfront, pre-emptively assuming you won’t have a chance to make another, Voss says.
  • Go with an escalation clause, which details how much you’re willing to outbid another offer up to a certain limit, says Niakin. For example, you make an offer of $400,000 with a cap of $425,000, offering to outbid the last bidder by $5,000 increments until it reaches $425,000. (You’ll also want to get a lawyer to word the clause correctly.)

“This is only recommended if the buyer really wants the property and is willing to lay all their cards on a table when they know there will be multiple, very motivated buyers making offers,” Niakin said.


It is very important for a buyer to know their financial life before they start the buying process. Just because the bank has approved your for X – doesn’t mean X fits your lifestyle. So each buyer needs a budget and needs to know their maximum comfort level. 

Rarely is a buyer going to get a second chance in this market. So writing your best offer, with no chance of a counter is the best mindset. In regards to the escalation clause – we’ve seen this, we’ve done this – but always with a Real Estate attorney present. In Realtor jargon – these are known as sharp offers.

Put in a bid, then skip town

Now is not the time to head to the Bahamas. If you really want that home, you should stick around until you know whether your offer fell through or was accepted.

“Don’t go out of town or be otherwise inaccessible to your Realtor during a bidding war,” says Voss. “Be prepared to make decisions very quickly and respond very quickly to questions about your offer.”


If you are planning a vacation – let your Realtor know when and then plan on stepping out of the buyer ring until you return. There is very little time in the midst of real estate negotiations and you could lose out on a home if you are not available to respond quickly.


Drag your feet to the closing


Sellers like to close fast. When you’re in a multiple-offer situation, it’s best to make an offer with few contingencies. That can mean forgoing repairs or added appliances and furniture.

An appraisal contingency is debatable if you’re paying with cash—if you really know your area and are confident it will appraise right, you might decide to waive it—but be sure to ask your agent. One thing you don’t want to do is skip the inspection contingency.

No matter what, be quick about it.

“Tighten up your timelines,” Niakin said. “Instead of 15 days, make it seven or 10 days. If you run into some issue, you can always ask for an extension later.”


Thankfully most sellers in the San Francisco Bay Area provide upfront disclosures packages that include a recent Home, Pest and Roof Inspection. In our market, we are seeing no contingencies. Which can be scary – but note – no property contingency doesn’t mean you cannot have your own inspections – you can!  However they are not contingent to the sale. Unless new material information is discovered (IE. Previously undisclosed defects arise.  You do have an opportunity to discuss this with the seller and have a short time frame to do so.)  Sound scary? That is why The Caton Team is by your side each step of the way. We will provide the disclosures to you, answer your questions and advise you how to tackle each offer.  Each home presents its own opportunities and issues – so each situation is different.  

Lose your sense of perspective 


Above all else, keep a clear head.

“Don’t be emotional; set a threshold price and don’t be upset if you lose,” Vinokur said.

“Get your ducks in a row before entering the home purchase process,” Lee echoed. “Don’t be afraid to walk away.”


This article had great advice that I do follow with my own clients. We always say – offer your best price and if you do not get the house – you know they other fella paid too much!

If you have any real estate questions or concerns or would like to share your two cents please feel free to email us, or comment below.


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Thanks for reading – Sabrina

The Caton Team – Susan & Sabrina – A Family of Realtors

Berkshire Hathaway HomeServices – Drysdale Properties

Sabrina BRE# 01413526 / Susan BRE #01238225 / Team BRE# 70000218/ Office BRE #01499008


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Sabrina Caton - The Caton Team - Realtors

Sabrina & Susan are native Californians - born and raised in the Silicon Valley with a passion for Residential Real Estate. A mother and daughter-in-law duo called - The Caton Team. With over 35 years of combined, local Real Estate experience and knowledge – would’t you like The Caton Team to represent you? Let us know how we can be of service. Contact us any time. Call | Text at: 650-799-4333 | Email The Caton Team believes, in order to be successful in the San Fransisco | Peninsula | Bay Area | Silicon Valley Real Estate Market we have to think and act differently. We do this by positioning our clients in the strongest light, representing them with the utmost integrity, while strategically maneuvering through negotiations and contracts. Together we make dreams come true. The Peninsula is our backyard - let us help make it yours. We represent Buyer’s and Seller’s throughout the Bay Area. The Caton Team – Susan & Sabrina A Family of Realtors Effective. Efficient. Responsive. What can we do for you?

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