“Bidding War” is a term used widely in the public and by the media. The industry term is “Multiple Offers.” I shy away from using bidding war because I feel it creates an image of multiple buyers standing on the front lawn shouting numbers like a live auction. In reality, it’s more like a one shot, sealed bid auction. The buyer is certainly competing but prices are not disclosed to other parties and they are not being auctioned up in an emotional frenzy. The buyers make an offer at their maximum price and either get the house or not.
A multiple offer scenario occurs when two or more buyers choose to make an offer on a property at the same time. All interested buyers (or their agents) are informed that they are competing with one, or more, offers and provided a formal time for offer presentation. It should be explained to all interested parties that the offer with the terms (price, closing dates, inspection, etc.) most favourable to the seller will be selected (and likely accepted).
The other offers don’t typically receive a counter offer, unless two or more are quite similar and need one to improve and stand out from the crowd. It is possible that the winning offer will receive a counter offer to slightly adjust dates or other terms, but price is not usually a talking point if it is the stand alone, best offer.
The buyers always have control. They choose their maximum price and present it up front. That maximum does not have to be at, or far in excess of, asking price. Each buyer has their own maximum. All offers are all laid out in front of the seller and only one wins. The seller’s selection process is discussed in detail in How to Win a Multiple Offer.