If you’re buying a home in a hot market or you’re just eyeing a super in-demand property, you very well might find yourself in a bidding war, competing with dozens of other offers, buyers and, in many cases, even investors.
Fortunately, a bidding war doesn’t necessarily mean you’ll lose the property — nor does it mean you’ll have to pay a ton more for it.
Have you found yourself in the midst of a bidding war while shopping for a house? Just want to be prepared in case you do? These tricks can help you win out:
1. Increase your down payment or earnest money deposit.
Adding a little extra to your down payment or, more importantly, your earnest money deposit can go a long way. It’s “putting your money where your mouth is,” as they say, and it shows the seller that you’re serious about buying their home — that you’re willing to put your hard-earned cash on the line to prove it to them.
2. Waive contingencies.
If you really want to convince a seller to choose your offer, then waive contingencies. Waiving your financing contingency essentially means your offer doesn’t hinge on your approval for a mortgage loan — that you’re committing to buy the house regardless. It’s a sure-fire bet for sellers, and as long as the price is right, it’s a pretty hard deal to pass up.
Waiving your inspection contingency can also catch a seller’s attention. This means you forgo having a home inspection (and requesting repairs/credits based on the inspection’s findings). It can be dangerous for the buyer to skip this step, but in desperate times, it can be a solid way to win over a seller, as it means less work and a quicker sale, too.
3. Show your pre-approval letter.
Always include your pre-approval letter when submitting an offer on a home. Not only does this show the seller that you’re a safe bet to get financing, but it also tells them you’re serious about purchasing a house. If your lender is willing to, ask them to include other data on your pre-approval letter, like your credit score, the amount you’re approved for, and your employment data. This can give sellers more confidence as well.
4. Offer more money.
You can always offer more money, too. Tell your agent the max you’d be willing to spend, and give them free rein to counteroffer until you’ve got the winning bid (or you’ve been outspent.) Just make sure you talk to your mortgage lender if you’re planning to offer more than you’ve been approved for. You might need to foot the difference out of pocket if you don’t get it pre-approved first.
5. Consider an escalator clause.
If you don’t want to offer a higher bid outright, consider including an escalator clause in your offer instead. This essentially tells the seller you’ll pay up to XX amount if the conditions require it. It basically gives a maximum bid, without committing you to that full amount unless absolutely necessary to win the home.
6. Write an offer letter to the seller.
You may also want to make a personal appeal to the seller. Write them a letter telling them what you love about their home, what it would mean to your family, and why you want it. Pulling at their heartstrings and giving them insights into just what sort of future you’d offer their property might be enough to sway them.
7. Keep your inspection period short.
Inspection periods sometimes add a week or more to the closing process, so consider keeping yours short and sweet — 3 to 5 days at most. To ensure this is workable, go ahead and find your preferred home inspector and have them on standby. Make sure you can get an inspection performed (and a report back) in that time period.
8. Be flexible with your closing date.
Some sellers have specific closing dates in mind. They may want a date two months away so they have time to close on their new home, or they might want one in three weeks so they can move on as quickly as possible. Try to be accommodating, and check with your mortgage lender to make sure they can work with any quick closing dates that might be required.
9. Tap your real estate agent.
Finally, lean on your real estate for help in a bidding war. If they’re experienced enough, they should have a few extra tools and negotiating strategies in their arsenal. They may also have additional details on the home or seller that could give you the upper hand.
The Final Word
Do you need a recommendation for a great agent that can lead the way? Just want a mortgage lender who can help you traverse these competitive situations? Then contact Embrace Home Loans today. We’re here to help.