Bidding wars arise when multiple buyers compete to purchase the same property. In hopes of winning the home, buyers will make more attractive offers, which often drive up the price of the property beyond what it was listed for.

Bidding wars are most likely to occur in what realtors call a “hot sellers’ market” – when there is less inventory for buyers to choose from. Other contributors to bidding wars include the desirability of the location, the strength of a school district, and the condition of the property.

Depending on the property type and location, bidding wars can quickly get heated and emotional, and because of this buyers can make critical mistakes in the bidding process. According to Forbes Real Estate Council members, here are some common property bidding mistakes. The full list can be found here.

• Getting Caught Up In the Hype of Quick Buying Trends: Low-interest rates, lower inventory and a surplus of buyers have changed investors’ buying habits. We have seen more and more waived appraisal contingencies and buying of houses unseen based on price point and geography. The important buying principles still apply: Do your research on that home, especially on comparable homes that have sold in the last 30 days before you make a bid.
• Assuming That Sellers Are Desperate: Don’t assume that sellers are desperate, and will accept an offer below fair market value. Most home buyers have educated themselves on making their offers competitive by offering waived or shorter contingency periods and faster closing dates so investors no longer have the advantage in that way.



• Not Studying Lease Terms: Pay attention to lease terms. If leases expire in less than 18 months, know that you might be searching for a new tenant in 12. A renewal option isn’t a guaranteed extension. The tenant may not renew. Negotiate with the seller to extend leases prior to closing. Also, check that leases don’t expire at the same time and leave you with the potential for 50% vacancy on the same day in the future.
• Failing To Research Property Taxes: One of the most significant operating expenses in any real estate investment is property tax. Investors frequently get this wrong in their underwriting, as there is no universally consistent treatment of how taxes will change once a property is purchased. If you are not familiar with what is customary in a particular market, do your homework, as this can help avoid future surprises.
• Not Having a Solid Exit Strategy: Don’t get caught up in “auction fever,” especially when capital is easier to come by. Thorough due diligence, a solid exit strategy for the property and a hard limit on the amount they are willing to pay is key—and don’t go over that, despite the exhilaration that comes with the auction process. The numbers that support the exit strategy should drive the investor’s participation in the bidding.

REMAX/Metro realtor Estelia Mesimer has been through many ups and downs of the real estate market in St. Petersburg.In a hot market, she advises buyers “to be prepared to move quickly” which in turn gives your agent the ability to act quickly on your behalf. Another strategy is to include an escalation clause as an addendum to your offer that lets the seller know that you are willing to increase your offer by a set amount if another buyer matches your offer.

2021 Real Estate Trend – Continued prominence of working from home

According to realtor.com’s 2021 Housing Forecast report, “As remote work extends into 2021 and in some cases employers grant employees the flexibility to continue remote work indefinitely, expect home listings to showcase features that support remote work such as home offices, zoom rooms, high-speed internet connections, quiet yards that facilitate outdoor office work, and proximity to coffee shops and other businesses that offer back-up internet and a break from being at home, which can feel monotonous to some, to become more prevalent.”

St. Petersburg Communities

Allendale Terrace
Bahama Shores
Bayway Isles
Coquina Key
Crescent Heights
Crescent Lake
Downtown
Greater Pinellas Point
Historic Kenwood
Historic Old Northeast
Historic Roser Park
Historic Uptown
Isla del Sol
Old Southeast
Placida Bayou
Snell Isle

If you’re interested in any of these of communities or live in one and are thinking of selling, talk to The Mesimer Team.