How does a Bidding War work?
This is every Seller’s dream.
Every seller wants to get a good price and what better way than to have buyers vying for the same, desired property?
However, a Bidding War is a very delicate situation and must be well managed to ensure the best for sellers. Personally, I felt it was more straight forward for buyers, as it was all about maximum price and Terms & Conditions that a buyer is willing to give or accept.
For this particular property at Mandarin Gardens, there was honestly no other way. With a spectacular view from the balcony and a massive space of 2034sqf, from the moment I entered the house, there was no doubt that buyers would be scrambling to grab this unit.
At the point of advertisement, we realized that the last transacted price for the same size was $1.97 million in September 2020. Based on recent market trends, after the Circuit Breaker, we knew that properties of larger sizes like ours (at 2034 sqf!) were in great demand.
We decided to bite the bullet, came to unison with the sellers, and started to advertise at $2.2 million. To maximize the opportunity for our client, we quickly did a video, advertised on our Facebook, YouTube, Website and various property portals.
In a week, a total of 8 buyers turned up for viewing. Some of them commented that our price was higher than the previous sold at $1.97 million for the same size in 2020 and they were hesitant to make a serious offer.
Nevertheless, after the viewings, we received three offers above $2.1 million. It was pretty exciting for our clients as they expected offers close to $2 million, so any amount above was a huge bonus.
In addition, to add to the excitement, a bidding war had begun. With three contenders, we knew that it was a delicate situation. Why?
(1) Imagine if I kept informing each of the contenders of every new (and increasing) offer made by their competitors, he/she may get frustrated at some point and drop out of the sale. If you were one of them, you would not like that either, right?
(2) There were Terms & Conditions preferred by each of the buyers, that required the seller to rethink and consider all their options. Some Terms & Conditions such as ‘length of rent-free stay’ or ‘completion dates’ were crucial points of consideration. Having to negotiate on all these will take time, dragging the process out.
(3) In the event that the process gets dragged out, buyers may lose patience/interest and choose to purchase other properties. Our sellers would have missed a golden opportunity to sell and may have to wait for a long time for the next offer.
(4) Some of you might think, why not price it even higher to avoid this issue? Well, if we do that, there’s a possibility that we’re going to price ourselves out off the market. Buyers could not have chosen not to see or attempt to start negotiations. Our sellers might just lose the chance to reap the best benefits from selling their property.
To ease things along, we decided to be transparent. We finalized the Terms & Conditions that the sellers would be willing to sell at, drew up the Option to Purchase (OTP), and sent it to all three interested buyers. We then gave them a deadline, with the exact date and time to submit their highest bid.
Once we heard back from all the buyers at the confirmed timing, we informed the winner with the highest bid of their success and handed them the OTP within the hour.
As for the other two contenders, the final result was only be made known when we had passed the documents to the successful bidder and received the Option Fee in exchange. We did not disclose the confirmed sale price until the successful buyer has exercised.
At the end, we were very pleased to end up with the highest bid of $2.201 million, with the buyers accepting all the Terms & Conditions stipulated by the sellers. The buyers got the house at their desired price and the sellers sold the property at a higher than expected price.
Remember, a transaction is always about a willing buyer and willing seller. Value is, after all, in the eye of the beholder. 😊