Letter Writing: A Way to Win Bidding Wars
Could writing a heartfelt letter to the seller give you an added advantage during a real estate bidding war? A new report suggests that New Jersey home buyers can benefit from this “above-and-beyond” strategy.
Bidding wars have become a common occurrence in real estate markets across New Jersey. This is particularly true for hot markets located within the New York City metro area. Buyers priced out of the city are now looking at surrounding towns and suburbs. This increases competition for New Jersey home buyers and often leads to bidding wars.
Writing a Letter to Win a Bidding War?
In a competitive real estate market, buyers need every advantage they can find to land their dream home. One way to give yourself a leg up over the competition is to write a heartfelt letter to the seller, telling them (A) who you are and (B) why you want to buy their home.
Real estate agents in New Jersey and across the nation have long touted the benefits of writing a letter to a seller, in order to win a bidding war. And now they have some data to back up that claim. According to a new report by the national real estate brokerage Redfin, home buyers who write a letter to the seller can increase their chance for success by 52.2%.
To uncover these findings, Redfin examined roughly 14,000 purchase offers from home buyers that were made during 2016 and 2017. Specifically, they looked at real estate offers that involved competition bids from other buyers, written by their agents in housing markets nationwide.
Here are the key findings, reported previously by the Wall Street Journal:
- All-cash offers almost doubled a home buyer’s chances of landing the deal.
- Waiving contract contingencies boosted the buyer’s odds by 57.9% on average.
- Writing a letter to the seller increased the odds by a respectable 52.2%.
While letter writing increased the chance for success across the pricing spectrum, it was even more effective in the higher-priced luxury market. Cover letters increased a luxury buyer’s chances by more than 75%, according to this particular analysis.
Call it the power of prose. Apparently, a heartfelt letter from buyer to seller can increase the odds of winning a bidding war within the New Jersey real estate market. And when you consider that this strategy costs nothing more than an hour or so out of your day, it becomes even more appealing.
Low Inventory Has Boosted Competition for Buyers
Of course, writing a letter to the seller might not be necessary in every real estate market. When supply exceeds demand (as in a “buyers’ market”), NJ home buyers typically don’t have to make as much of an effort. But in a more competitive real estate market, with limited supply and strong demand, those purchasing a house will want to bring their ‘A’ game.
In others words, a home buyer’s efforts and strategies should reflect current market conditions. When conditions are more competitive, house hunters must work harder to get ahead of the pack.
These are the conditions we are seeing in many markets across New Jersey, as we move into 2018. Housing inventory is still tight in many towns and cities. This is true for the nation as a whole.
According to a recent report from the National Association of REALTORS®, housing inventory was down 10.3% from a year ago. Inventory levels have declined for 31 straight months on a year-on-year basis.
Jonathan Miller, who heads up a New York appraisal and research firm, recently told the New York Times: “The city is this pot of water that’s spilling over on the sides, and that excess demand is going to the suburbs. It’s all being driven by the lack of affordability.”
Much of that “spillover” is spreading into New Jersey real estate markets that are close to NYC. It’s leading to increased competition among home buyers and, in some cases, bidding wars. Hence the need to bring your ‘A’ game when buying a house in New Jersey. Writing a letter to the seller is just one more arrow in your quiver.