How To Avoid A Resale Bidding Battle

Written by Posted On Monday, 14 December 2020 10:12

In our last piece, we shared what successful Realtors are doing to win a resale bidding battle.  

This column will share a simple strategy to avoid a resale bidding battle in the first place.

Here is the truth. 

The easiest way to avoid a bidding battle for a used home is to show a home that does not negotiate price or force your client to submit a bid.

Where might you find saleable, no-bid inventory? Show new construction.

But aren’t new homes in short supply, too? 

Yes, they are.  

So, what is an agent to do if a new home is not immediately available? 

Thomas Popadak, an onsite sales consultant with Hanover Family Homes in Haines City, Fl said, “the best advice I can give Realtors when showing new homes inventory today is this:

“Help your new home shoppers understand how important it is to be decisive and be willing to act fast. Prices are rising; delaying their decision by a month or so can cost the buyer thousands of dollars. 

“Help your prospects  understand there are usually three inventory options:

  1. To Be Built or Pre-Construction Sales – seven months estimated build time or longer.
  2. Partially Completed Homes – short term completion based on where the home is in the construction process. 
  3. Move-In-Ready Spec Homes-(these tend to move the fastest. In today’s market, these are usually presold long before completion), but a cancellation may have just come in.

“However, at Orchid Terrace, my onsite sales partner and I are limited to eight sales a month, and that is fine. We understand the importance of building a quality home with lasting value.

“The issue is that material and labor costs continue to rise. And, if we get too far ahead of ourselves, quality would suffer,” Popadak said.

According to Popadak, prospects may sign up to reserve a purchase opportunity from next month’s sales allotment. Home shoppers may qualify for such a list with a pre-qualifying letter from one of our preferred lenders and a $2500 deposit. When final pricing is determined, those on the list and their real estate agents are notified that they may purchase a home for the price listed. 

When you take your prospect to a builder that limits sales, ask if he is taking deposits for reservations and how your prospect must qualify to get on the list.

There is no bidding in this process, but the fixed base price might be higher, or the lot prices may have increased. 

How do you find such an inventory? MLS is always the most popular. 

But for pure new homes inventory searches, you might want to get closer to the action of the new home and check out , which describes its new home search services as “Your New Home Companion For New Home Construction.

 Full disclosure: New Home Co-broker Academy has partnered with them for years and knows no better resource for agents to find and track new home prospects. 

Many builders are aggressively reaching out to brokers even in one of the strongest new home markets in modern history. 

They know that according to the National Association of Realtors, Realtors are selling two out of every three new homes sold across America. They also know they will need real estate agents as much, if not more, in soft markets.

Get to know your new home inventory because what agents need more today than ever is saleable inventory. This fact is not likely to change any time soon.

Can you expect commissions to remain consistent? While new home sales are robust, you would think builders might reduce commissions to improve their margins. But it is not happening. 

There may be exceptions here and there, but today’s homebuilders understand that their competition is not the builder across the street. Their competition is the Realtor driving by their entrance to show a resale to a home shopper qualified to purchase a new home.  

Hanover's sales director Nichola Mitchell explains their policy this way:

“We are maintaining our current commission structure with local Realtors. They are an essential part of our success. They need saleable inventory, and we need their qualified buyers.

“We not only cooperate with local real estate agents. We give them a tangible reason to sell as many of our homes as they can," Mitchell said, "by increasing their commissions based on the number of homes they sell.” 

“Rising markets create competition, so we see incentives as a competitive advantage. We need more qualified home shoppers visiting our models, and that is what Realtors are bringing.

“Our Realtor VIP program rewards their loyalty to the Hanover Family Builders brand,” Mitchell said.

Bottom line: if you have home shoppers looking for a resale at new home price points, show them a home they can move into without a bidding battle. 

The best way to avoid losing a sale is to avoid getting into sales skirmishes that may cost you a sale and, in some cases, a listing on your prospect’s home.

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David Fletcher, NHCB

David Fletcher is a co-founder and CEO of New Home Co-broker Academy LLC., an online e-commerce business. Visit David's website to take his famous 3-hour online course, How To Build  A New Homes Niche, to become a certified New Home Co-broker (NHCB). More than 5,000 graduates. Content is based on his long career and onsite sales success working with both builders and Realtors to list and sell more than $3 billion in new construction. If you are a broker who wants to offer your agents a way to add new homes to their resale inventory and home shoppers, this is your solution. 

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