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Bay Area Bidding Wars: A Buyer’s Guide to Multiple-Offer Scenarios
In the San Francisco Bay Area, home buyers often find themselves caught up in multiple-offer situations or even bidding wars. This can be a stressful scenario, especially for those buyers who aren’t prepared to deal with it.
The good news is that you’ve come to the right place. This resource guide provides all of the information you need to know about Bay Area bidding wars and how to navigate them.
Here are the five most important points covered in this guide:
- A bidding war occurs when multiple home buyers compete to purchase the same property by submitting increasingly higher offers.
- This often leads to a situation where the home ends up selling for more than the original listing price, due to competitive bidding.
- Bidding wars are common in the Bay Area, where there usually aren’t enough homes on the market to satisfy demand from buyers.
- Buyers using mortgage loans sometimes find themselves competing with all-cash offers, which presents another challenge.
- Buyers can prepare for bidding wars by getting pre-approved for a loan, establishing a clear budget, and knowing when to walk away.
Need financing? Locally-owned and operated, Bridgepoint Funding has been serving the Bay Area for nearly 20 years. Please contact us if you have questions or want to apply for a loan.
Bidding Wars Common in the Bay Area
Real estate bidding wars are a common occurrence in the Bay Area. For evidence of this, we can use Multiple Listing Service (MLS) data and other sources.
Consider the following statistics:
- In spring 2025, roughly 59% of homes sold in the San Francisco-Oakland-Hayward metro area ended up selling above the original list price.
- Nationwide, only about 24% of homes sold for more than the original listing amount during that same timeframe.
When homes end up selling above the seller’s asking price, it’s usually the result of multiple-offer scenarios and bidding wars. And these numbers show that it’s more likely to occur in the Bay Area, compared to most U.S. cities.
Example of How a Bidding War Unfolds
In the real estate world, bidding war scenarios can vary due to a number of factors. There’s no standardized playbook. But the process usually looks something like this:
- Home listed: A seller lists a desirable home at $800,000 in a competitive market.
- Multiple offers: Several buyers submit offers within the first few days, with initial bids ranging from $800,000 to $820,000.
- Best offers: The seller’s agent notifies all interested buyers that multiple offers have been received and invites them to submit their highest and best offers.
- Bidding escalates: Buyers increase their offers to stay competitive. One buyer raises their bid to $835,000, another to $850,000, and a third to $860,000.
- Final counteroffer: The seller counters the top two buyers, asking them to submit their strongest final offers.
- Winning offer: One buyer submits a final offer of $875,000 with limited contingencies, and the seller accepts.
- Above asking: The home closes at $875,000, which is $75,000 over the original asking price due to the bidding war.
The takeaway: Bidding wars can quickly drive up a home’s price beyond the original listing. So home buyers should set a firm budget, make a strong but realistic offer, and know when to walk away.
Market Research Is the Key to Success
Researching your real estate market ahead of time could help you navigate a multi-party bidding war, and possibly come out on top.
Keep an eye on trends like home prices, inventory levels, and the average time properties spend on the market. Understanding these dynamics will help you gauge whether it’s a seller’s or buyer’s market.
Market awareness can also help you develop realistic expectations about the buying process. You’ll know how quickly you need to act in a multiple-offer scenario, and how much you might need to offer based on market conditions.
Getting Your Finances in Order
If you’ll be using a mortgage loan to buy a home in the Bay Area, you can start by getting pre-approved. This is when a mortgage lender reviews your financial situation to determine your borrowing capacity.
You’ll receive a pre-approval letter that (A) helps you set a maximum budget and (B) demonstrates to sellers that you’re a serious and qualified buyer.
It’s always helpful to know how much you can afford to pay for a home in the Bay Area. But in a bidding war type of scenario, this kind of pre-planning becomes even more important.
Sellers are generally more inclined to accept offers from borrowers who have been pre-approved, versus those who have not. Pre-approval will also help you establish an upper limit for bidding, so you don’t exceed your budget.
Crafting a Competitive Offer
In a multiple-offer situation, the strength of your offer can make all the difference. With all other things being equal, a stronger offer can increase your chances of winning a bidding war.
Start by assessing the property’s market value. Look at recent sales of similar homes in the area (comparable sales or “comps”). This will give you a baseline for what the property is worth.
The term “comparable sales” refers to homes that are similar in size, condition, and location that have sold in the past few months. You can shape your offer based on how the property that you’re interested in compares to these comps.
Bay Area home buyers should also carefully consider the use of contingencies.
A contingency, in this context, is a condition or requirement that must be met for a real estate transaction to proceed to closing. It’s a protective clause that allows a buyer to back out of the deal if certain conditions are not met, and without losing their earnest money.
While contingencies are common in real estate contracts, having too many can weaken your offer in a competitive situation. Evaluate which contingencies are necessary for your protection and which ones can be omitted.
Timing and Communication
Before submitting your offer, have a thorough discussion with your real estate agent. Talk about the offer amount, contingencies, and any unique terms you want to include.
Your agent will help you craft a compelling offer that aligns with your goals and the seller’s expectations. Be open to your agent’s advice. Their experience can be invaluable if a bidding war breaks out.
Being flexible with the closing timeline is another way to make your offer more attractive. While you might have a preferred timeline in mind, try to accommodate the seller’s needs if possible.
Discuss potential closing dates with your agent and be prepared to adjust them based on the seller’s requirements.
Flexibility can set you apart from other buyers and show your commitment to the deal. This is the ideal mindset for Bay Area home buyers who find themselves in multiple-offer situations.
The Importance of Earnest Money
Earnest money is another important consideration for home buyers who get caught up in bidding wars.
Definition: Also referred to as the “good faith deposit,” earnest money is a sum of money you put down to demonstrate your commitment when making an offer on a property.
Home buyers in the San Francisco Bay Area typically make earnest money deposits somewhere between 1% and 3% of the purchase price. But that’s not a hard-and-fast rule.
By offering earnest money, you’re not just telling the seller you’re interested in the property. You’re also showing them that you have the financial means and intention to follow through with the transaction.
In multiple-offer situations and bidding wars, a substantial earnest money deposit could make your offer more appealing to the seller.
The earnest money deposit is typically held in an escrow account managed by a neutral third party, such as a title company. This ensures that the funds are secure and not accessible to either party until certain conditions are met.
Potential Counteroffer Scenarios
In a bidding war, Bay Area home buyers could experience several different counteroffer scenarios:
- Counter with a higher price: The seller might counter by asking for a higher purchase price. If this happens, determine whether you’re willing and able to increase your offer without stretching your budget.
- Adjusting contingencies: Sellers may request changes to the buyer’s contract contingencies, such as shortening the inspection period or waiving specific conditions.
- Closing date negotiation: Be prepared for potential negotiations regarding the closing date. Flexibility here can be a valuable bargaining chip.
- Additional terms: Sellers might include additional terms or requests in their counteroffer. Analyze these terms carefully and discuss them with your real estate agent or attorney.
Just know that in a real estate bidding war, time is of the essence. So whichever course you take during the counteroffer stage, you’ll want to do it in a timely manner.
Knowing When to Walk Away
In the frenzy of a multiple-offer situation, home buyers should know when it’s in their best interest to walk away. It’s important to stay within your budget throughout this process.
If a bidding war pushes the price beyond what you can comfortably afford, it’s a sign that it may be time to bow out gracefully. Overextending yourself financially can lead to stress and financial strain down the road.
Trust your instincts, consult with your real estate agent, and remember that the right home for you is out there — even if it’s not the one you’re currently pursuing.
