Bidding War

AAA

DEFINITION of 'Bidding War'

A situation where two or more buyers are so interested in an item (such as a house or a business) that they make increasingly higher offers of the price they are willing to pay to try to become the new owner of the item. The bidding usually occurs at a fast pace, requiring potential buyers to make less thought-out decisions than they normally might. While a bidding war is a seller's dream come true, it may cause buyer's remorse.

INVESTOPEDIA EXPLAINS 'Bidding War'

Bidding wars are common in housing sales, especially in seller's markets. For example, a property listed at $250,000 may sell for $300,000 in a bidding war. Bidder A might offer $250,000; then Bidder B offers $260,000, Bidder C offers $270,000 and so on until one bidder offers $300,000 and the other bidders are no longer willing to offer more money. Auctions are another situation where bidding wars are common.

RELATED TERMS
  1. Real Estate

    Land plus anything on it, including buildings and natural resources.
  2. Sealed-Bid Auction

    A type of auction process in which all bidders simultaneously ...
  3. William Vickrey

    A Canadian economist who won the Nobel Prize in Economics in ...
  4. Counterbid

    A purchase offer made in counter to the offer of another potential ...
  5. Trade War

    A negative side effect of protectionism that occurs when Country ...
  6. Offer

    1. When one party expresses interest to buy or sell an asset ...
RELATED FAQS
  1. What are the different types of price discrimination and how are they used?

    Price discrimination is one of the competitive practices used by larger, established businesses in an attempt to profit from ... Read Full Answer >>
  2. What are the different sources of business risk?

    A certain risk level is inherent in running a business. A company cannot completely eliminate risk, but it can control or ... Read Full Answer >>
  3. How does the law of diminishing returns affect marginal revenue?

    The law of diminishing returns is better thought of as the law of increasing opportunity costs. The law states that -- if ... Read Full Answer >>
  4. What is the theory of asymmetric information in economics?

    The theory of asymmetric information was developed in the 1970s and 1980s as a plausible explanation for common phenomena ... Read Full Answer >>
  5. How do command economies control surplus production and unemployment rates?

    Historically, command economies don't have the luxury of surplus production; chronic shortages are the norm. They have also ... Read Full Answer >>
  6. How is marginal analysis used in making a managerial decision?

    Marginal analysis plays a crucial role in managerial economics, the study and application of economic concepts, to managerial ... Read Full Answer >>
Related Articles
  1. Home & Auto

    7 Steps To A Hot Commercial Real Estate Deal

    For savvy real estate investors, times of lower prices reveal investment opportunity.
  2. Home & Auto

    Top 5 Must-Haves For Flipping Houses

    Not everyone can make money in this field. Find out what you need before you buy in.
  3. Home & Auto

    Top 4 Things That Determine A Home's Value

    Your house depreciates over time, while the land beneath it is likely to do the opposite.
  4. Entrepreneurship

    7 Steps To Selling Your Small Business

    Money in the bank and newfound free time make this grueling process worth the trouble.
  5. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  6. Economics

    What is a Management Buyout?

    A management buyout, or MBO, is a transaction where a company's management team purchases the assets and operations of the business they manage.
  7. Economics

    Modified Internal Rate of Return (MIRR)

    Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.
  8. Economics

    Explaining Cash On Delivery

    Cash on delivery, also referred to as COD, is a method of shipping goods to buyers who do not have credit terms with the seller.
  9. Credit & Loans

    What's a Revolving Line of Credit?

    A revolving line of credit is an arrangement made between a company or an individual and a bank to borrow money on a short-term basis.
  10. Economics

    Understanding Horizontal Integration

    Horizontal integration is the acquisition or internal creation of related businesses to a company’s current business focus.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center