What is Bidding War?
A bidding war describes a situation in which two or more prospective buyers of a
property compete for ownership through incrementally increasing bids. A bidding war happens when potential buyers of a deal compete for ownership through a series of rising price bids, sometimes pushing the final price up past the original value of the property.
Bidding wars usually happen when buyers compete for ownership of a house, a building or a business in an especially desirable location and particularly during a seller’s market. Other times, bidding wars are initiated as a result of the sentimental value the property or piece holds.
Bidding wars may also occur as a result of high net individuals or rival companies trying to out-bid each other just for rivalry.
Comparable to an auction, a bidding war often occurs at a rapid pace, indicating that during a bidding war, the potential buyers are exposed to making rash or emotional investment decisions.