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.

BREAKING DOWN '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.

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