How to Win the House Bidding War
If you haven’t lived under a rock in the past 18 months, you know the housing market is crazy. Prices are out of control, demand is out of control, and real estate is selling faster and with more supply than before the pandemic. If you’ve recently thought about buying a home or have tried it, you’ve probably felt the pressure of this competition.
Various measurements of growth suggest that the buying boom could slow a little , but it is unlikely that it will be easy to buy a house at a reasonable price without going into a bidding war anytime soon.
If you’re looking to get into this mess, there are several ways you can make your offer more competitive.
Offer more and pay in cash
Unfortunately, money speaks for itself in the housing market. If you meet or exceed the asking price and all other home bids, your bid will be competitive. Likewise, the more you can put in cash versus funding, the more attractive your position is, as the seller doesn’t have to worry about your funding going down.
Another leverage is the escalation clause. As John Gluch, owner of the Arizona-based Gluch Group , explains: “If someone offers more than the $ 600,000 you are offering, you surpass the next largest person by about $ 5,000. You do this so you don’t surpass you by $ 1,000. “
However, some real estate agents say that it can be difficult for sellers to parse escalation terms if there are multiple offers, so it’s best to just put forward your best offer from the start.
Comply with the seller’s terms and conditions
If your offer is lower, but makes the seller’s life easier, you can outperform someone who is simply willing to spend more money. For example, agreeing with the seller on the desired closing date and letting them stay in the home a little longer until they are ready to move can be more valuable than extra money.
“People don’t want the hassle, expense, or headaches of double moving,” says Amy Keith, owner of Kite Team – Keller Williams Realty Infinity in Illinois. “Your agent always asks what is most important to the seller.”
Avoid contingencies
Purchase offers are traditionally accompanied by certain contingencies that protect the buyer from being caught in a bad deal. Common contingencies include home inspection, financing, appraisal, and home sale. All of this makes it a little easier for the buyer to opt out of the deal, and it is more difficult for the seller to know for sure that the deal is final.
While the above contingencies may make your offer more competitive, remember that this also increases your risk. Don’t get carried away with the process in such a way as to give up all your leverage and put yourself in a financial predicament.
Get pre-approval for your mortgage
Securing your funding ahead of your proposal shows the seller that you are serious and can speed up the process. “At this point, this is a baseline for competitive offerings, not a way to stand out,” says Chuck Vander Stealth, a real estate agent with Quadwalls.com in Indiana. Be prepared to demonstrate to sellers that you are financially capable in other ways, such as credit history, income and employment status, and funding to cover costs.
Be ready to make quick decisions
It boils down to upfront research so you can make important decisions – and smart decisions – in a short amount of time. Know what you can pay, what is important to you, and what the local market is doing so that you don’t get caught up in an unreasonable or unacceptable bidding war. Likewise, prepare all your paperwork and everyone on your team (agent, lender, attorney, etc.) in the course.
You also need to be prepared to act quickly as soon as your proposal is made, whether it be scheduling inspections or the opportunity to meet with agents.
Make a creative proposal
Jason Helios, a realtor at Community Choice Realty in Michigan, says some shoppers benefit from creative add-ons like paying for a salesperson’s truck or organizing a spa weekend. Again, it all comes down to knowing what is important to the salesperson.
“Home buyers need to think outside the box and not just focus on the supply price,” he says.
Contact the seller
Having a personal connection with the seller, if you manage to meet him, can give you an edge. This may be unclear, however: while some real estate agents still recommend adhering to the long tradition of writing “love letters” to sellers, others are moving away from the practice due to fears of discrimination .
Even the National Association of Realtors suggested that love letters could violate the Fair Housing Act. Alternatively, you can ask your agent to inform the seller’s agent of your interest and seriousness.
Finally, and this is important, while there are many ways to make your offering more competitive, watch out for a deal that costs you more than you can afford.