BROOKLYN — More than 100 people flocked to a recent open house for a two-bedroom penthouse in a boutique condo at the corner of Williamsburg’s Hope and Havemeyer streets.
A few days later, 15 offers came in for the $1.3 million, gut-renovated, 1,206-square-foot home at 14 Hope St., according to Eric Hantman, CEO of Prime NYC, which represented the seller.
But instead of provoking a bidding war among potential buyers for a popular apartment in a highly competitive part of town, the seller chose to ask for a "best and final" offer — the one-shot bidding strategy that's gaining in popularity, according to brokers.
Inventory has been tightening across the city — Manhattan had the lowest second-quarter inventory in the last 12 years, Brooklyn fell to a five-year low, and Queens was at the lowest point in eight years, according to Douglas Elliman market reports.
So whether it's a "best and final offer" option, or an all-out bidding war where everyone's cards are on the table, prospective buyers need a strategy if they want to find a new home.
Here are some tips from experts on how to win a bidding war
1. No regrets: offer as much as you’re willing to pay.
“If you treat it like a flea market, you won’t get something,” Stacey Max, of BOND New York. “If you bid $950,000 and someone else bids $1 million and you regret it, then you have to bid $1 million. If you weren’t willing to pay $1 million, then that’s fine.”
It's no time to haggle, Max said.
“Don’t play games in this market," said Eric Barron, CEO of Keller Williams NYC, advising buyers to go strong from the start. “There are times when your best and final should be your first offer.”
2. Drop the attitude.
“If you were a seller or listing broker with multiple offers, would you want to deal with an unprofessional and/or arrogant broker or buyer?" Barron asked.
3. Be flexible, not nitpicky.
When sellers have the upper hand, they don't need to work with a buyer with a lot of demands.
"Don't ask for things to be changed or for things to be included," Hantman said. "Take the apartment as is."
"Don’t drive the seller crazy with 'small' requests," echoed Barron, who said flexibility may be just as important as money.
4. Pay cash if you can. There is always the possibility of financing later.
Cash is king in this market, and the more a buyer can put down, the better, agents said.
“Getting a mortgage is not a sure thing, and a seller wants to chose something that's going to go through,” Max said.
5. If you can't pay cash up front, offer to waive the financing contingency — understanding the risks involved.
Contracts often enable a buyer to get out of a deal if they don't get a mortgage, but many house hunters are now waiving this.
“It’s a risky decision because if you don’t get a loan you either lose your deposit or have to pay cash,” Max said. “We only encourage [buyers to agree to this] if they’re able to. But in a market like this, probably most contracts don’t have the financing contingency.”
6. Offer an appraisal guarantee if financing is required.
In such a fast-appreciating market, appraisals sometimes come in lower than the offer, and low appraisals may hurt a buyer's chance at getting a mortgage unless a buyer agrees to put more down for a smaller loan.
"The bank wants to know that what you're paying is worth it, so if they foreclose they can their get money back,” Max said.
7. Write a personal letter.
"You want the letter to be really warm and fuzzy and well-written," Max said. "It should talk about how much they want the apartment and how great their life would be if they get it, but it can't be presumptuous. It has to read like they’re applicants."
Some sellers may even take a lower offer if they connect with a buyer, said Hantman, especially with "creative types," which is why he often encourages buyers to praise a seller's renovation or artwork, for example.
"People make emotional decisions," Barron said. "Find a commonality and bring emotion into the seller’s decision, particularly if you think you won’t have the strongest offer."