Winning a bidding war may not be easy, but it can definitely be worth the trouble to get into the house you really want to buy. Whether you were expecting it or not, finding yourself in a bidding war means you’ll have to get competitive quickly. There are some excellent tactics that win bidding wars, and the more of them you use the better your chances will be. Then you can be the winning bidder, so you can move into the house you love and get started really making it into a home. Before you start planning where the furniture will go and measuring for new window coverings, though, you’ll want to learn these seven tactics to help you win your bidding war.
1). Do you have a solid preapproval?
In order to be successful in a bidding war, you need to use the right tactics so you can have the highest chance of winning. One of those tactics is to make sure the seller sees you as a b buyer. You can do that through a preapproval letter from your lender that speaks to the amount you can borrow and your b likelihood of being approved. While these letters are generally very standard, if there’s something specific you need included your lender may be willing to accommodate your request. Be sure your preapproval letter is recent and that the details are correct, so the seller doesn’t have a reason to worry.
2). Is your down payment ready?
Another marker of your financial health is your down payment. Especially if you’re trying to buy a property that is relatively expensive, you might not be seen as a b buyer if you’re only putting a small amount down. Most buyers who have a good financial position will also have a 20% down payment, and some will even offer to put down more than that. By having a solid down payment ready to go, you indicate that you have the means to pay for the house you’ve made an offer on.
3). Should you start off with your best offer?
Among the tips for winning a bidding war is that you definitely don’t want to “lowball” the seller. A lot of buyers attempt to get a property for as little as possible, which makes financial sense, but if you’re in competition with others you can no longer use that tactic. Instead, put in a b offer. It may not be the very highest you’re willing to pay, but it should be something that is realistic for the property and the idea that you’ll be competing. Your agent can help you by making suggestions, but the decision is ultimately up to you.
4). Can you do an inspection before you put in an offer?
In most cases, you would get an offer accepted and go under contract. Then you would arrange for a home inspection within a set period of time. From the results of that inspection, you would decide if you want to proceed with buying the home. If you get an inspection before you make an offer, though, you’ll be able to base your offer on anything that might be wrong with the home. You can also waive the inspection contingency that normally goes into the contract, so that won’t be a part of your offer. That lack of contingency could make your offer look better to the seller.
5). Will you add an escalation clause?
Whether you’re a first-time homebuyer or you’ve done this before, you’ll need to decide if you want to include an escalation clause. These work by authorizing your agent to submit additional offers, or bids, as the price rises, up to a certain amount. If you’re the winning bidder, you won’t have to pay the highest price you would have agreed to unless the bid goes up to that point. Instead, you’ll pay an amount that’s just over the next highest offer. These clauses are great ways to keep yourself in the bidding war without the need to talk to your agent every time the price rises.
6). Should you hide your love for the home?
If you really love the house you’re trying to buy, don’t hide that from the seller. You can include a letter with your offer, and even pictures of your family. You certainly don’t have to do that, but the personalized touch that it creates may make the seller feel like they know you, and that can make them more likely to sell to you because they see how much you like the house. Don’t go overboard, though. A few lines and a couple of pictures is enough.
7). Can you keep your emotions out of the financial aspect?
While you’re showing the seller your love for their house, make sure you keep that love out of the actual bidding process. It’s still a financial transaction at the end of the day, and if you get too emotional about it you could end up over-bidding. You don’t want to pay too much for the house, no matter how much you like it. Working with your real estate agent to keep the actual, expected value of the home in mind throughout the bidding war can help you stay focused and make the right financial decisions for your future.
2 Point Highlight
Winning a bidding war may not be easy, but it can definitely be worth the trouble to get into the house you really want to buy.
In order to be successful in a bidding war, you need to use the right tactics so you can have the highest chance of winning.
