Looking to buy a house for less than $150k in Grand Rapids? The real estate market in Grand Rapids is crazy competitive right now, and when you zoom-in on the homes near the $150k price point it’s even crazier. If you find yourself looking for a home at this price point, you’ve more than likely experienced what we as Grand Rapids Realtors see every day… Homes having 10 offers on the day it lists, bidding wars, and eventually heartbreak for the many buyers that lose out.
If you happen to be shopping in the even more extreme landscape — homes less than $130k in hot Grand Rapids neighborhoods like Creston, Alger Heights, Eastown, Ottawa Hills, and the West side — then you’ve probably experienced this craziness at an even more ridiculous level. Our lead agent and buyers specialist, Jamie Krier, has been involved in bidding wars where her clients are competing against 20 or 30 offers, sometimes $25k or more over list price.
Unfortunately, many potential homebuyers in Grand Rapids know first-hand how heartbreaking it is to be out-bid on a home they loved. Sometimes, after losing out on few houses in a row due to competing offers, people can start to lose their perspective and judgement. The stress can build and build, and can ultimately result in poor decision-making.
In these situations, we try to help clients remember to stay disciplined, to keep a positive attitude, and to continue making sound and logical decisions.
Keeping a positive attitude is easier said than done. It’s all a matter of perspective. So if you find yourself bordering on the edge of “losing it”, hold that thought. Take a deep breath, do some quick meditation, or assume your favorite yoga position.
After you’ve cleared your mind, read on. We’re going to discuss some reasons why being outbid might actually be the best thing that can happen.
The beauty of being outbid
While it can be stressful to place your bid on a particular property that is targeted by so many others, it can also have some benefits. One unbeatable fact is that being outbid in one home is not the end of it all. There are more than 200 new homes arriving on the market in Grand Rapids every single week. More than likely, there will be one coming on the market in the next few days that you’ll like even more than the one you just missed out on.
The money-saving opportunity
One thing about being outbid on a home is that you end up securing and reinforcing your budget. In response to the stress and frustration of a competitive real estate market, many people will react by throwing caution to the wind and over-extending themselves beyond their budget. They reach deeper into their reserves and can then no longer afford to live comfortably and happy in the new home they just bought.
But you are not like them. Stay strong, stay persistent, and stick to your budget.
Every time you put an appropriate offer on a home and don’t win, take comfort in the fact that you are staying disciplined, persistent, and making good decisions, while other people are likely losing their minds and over-extending themselves.
If it helps, remember this quote from a former the president of the United States:
Nothing in this world can take the place of persistence…Persistence and determination alone are omnipotent. – Calvin Coolidge
If you prefer your motivational quotes with more grit & hustle (and a gangster rap soundtrack) then try this one:
“I know it seems hard sometimes but remember one thing. Through every dark night, there’s a bright day after that. So no matter how hard it get, stick your chest out, keep ya head up…. and handle it.” –Tupac
How to deal with multiple bids
A lot of potential homebuyers are stressed when they can’t win the bid to become the proud new owner of a house they thought was “the one”. It is all about being wise and using the right strategies and tips to avoid overspending and staying on the safe side. Here are some insights to help you out.
• Determine your budget
Before you think of placing any bid on any home, you should again consider your budget and determine if you can afford the property or not. The point here is to purchase what is within your reach, based on your finances. This means current financial situations and possible future financial situations.
• Manage Your Expectations
As you are preparing to place a bid on a home you know will be competitive, keep a positive attitude but don’t let yourself start day dreaming about BBQ’s in the backyard with your family and friends. There will be plenty of time for celebrating and basking in the glory if your bid wins, but in the meantime try to make a conscious effort to keep your emotions under control. Emotional roller-coasters are the enemy to sound and practical decision-making. Managing your own expectations can be one of the best ways to cope with the emotional ups and downs.
• Know when to stop
Understand what it is that makes the property so appealing to you, and understand what it might cost to add such features to another house with a lower price tag. Set your budget and go into the process with back-up houses or plans in mind. Having a back-up plan will enable you to be better disciplined with your budget, and help you stop at your limit with more ease.
• Extreme Competition
You may encounter a situation where the initial price of the house is really quite low, and the final bidder will pay almost double the price. Sellers will sometimes deliberately price their home low in an attempt to create a bidding war. Avoid bidding wars if possible, but don’t be scared of them if you find the perfect house under your budget. In a multiple-bid situation, talk with your Realtor and see if you can determine how many bids have come in so far. Before you rush in, ask your Realtor to help you study the number of bids on a particular home, and compare them to similar homes in the area that have sold. Nobody will have their finger on the pulse of the market better than a great, experienced, and active Realtor so make sure you’ve chosen yours carefully.
The best Realtors will have their own plans/strategies for approaching multiple-bid situations. These plans may include clever things like escalation clauses, hand-written notes with pictures of the buyer’s family, stand-out letters from the lender, hand-delivered bid packages, etc.. Make sure you ask your Realtor how much experience they have in multiple-bid situations and what their strategies are.
• Consider going for the older homes
When bidding wars heat up on the top homes in the market, you can use this opportunity to look for older homes that need a little remodeling. Here, you will not only save money, but you will have the chance to renovate the home to match your preference. You may even be able to get a particular type of mortgage that allows you to finance the costs of your renovations. Having a great lender to talk with about your options is just as important as having a great Realtor.
• Know what you’re looking for
If you’re just entering the marketplace as a potential buyer, start by figuring out exactly what you’re looking for. You’ll be exerting a lot of time and energy fighting for the house you want once you find it, so make sure you’re efficiently targeting the right houses and areas to begin with. Don’t waste time and energy. Find and complete a buyer’s survey like this one that will help you narrow down your search.
Summary
Before you take part in a bidding war, you should make sure to have a very specific bidding strategy, a well-defined budget, a back-up plan, and a positive attitude that will keep you moving forward if you’re outbid.
You should also make sure that you’re working with an experienced and savvy Realtor that you like and trust.
And if you do lose a bidding war, make sure that you know where to turn for motivation and perspective to keep you level-headed and strong. Whether it’s your therapist, yoga instructor, Realtor, or Tupac, just always remember to keep your head up!
