With a limited supply of houses and a large pool of buyers, its no surprise that bidding wars are becoming standard procedure. As a result of this, buyers must constantly be on their toes to ensure that the home of their dreams doesn’t slip through their fingers. While preparing to counter other offers won’t guarantee that you secure the house, it’s wise to construct a plan of action for when the time comes. Keep reading to get the scoop on what some of the best strategies and tactics are for winning a bidding war.
Increase your Offer
The best way to gain leverage in a bidding war? Offer more money than any other buyer involved. While money isn’t the only thing that sellers look at when comparing offers, it definitely holds a lot of weight in their decision process. Boosting your offer doesn’t always have to mean excessively going over budget. Sometimes a few thousand dollars can make or break whether you get the house, but it truly varies in every case.
If a seller sees a cash offer, chances are all other bets are off the table. Cash. Wins. If you have it available, use cash to your advantage. Sellers are so attracted to cash offers because it speeds up the entire homebuying process and eliminates potential complications with financing a mortgage.
Of course, having large amounts cash is rare so this strategy is not realistic for the majority of buyers. But if you do, your chances of winning a bidding war are exceptionally higher.
If a cash offer doesn’t apply to you, another powerful way to bolster yourself as a candidate for your dream home is to get pre-approved for a mortgage. Obtaining a pre-approval letter assures sellers that you’re serious about buying the home and that they don’t have to worry about any issues concerning what you can afford. The last thing a seller wants is to accept your offer, have it fall through, then completely restart their search for a buyer.
While contingencies can be important to have as a buyer, it makes you less likely to win during a bidding war. Sellers want minimal risk involved when deciding which offer to accept and waiving some (or all) of your contingencies proves that you’re unlikely to back out of the purchase.
However, keep in mind that this can be risky on the buyer’s end. Waiving your contingencies means you have the potential to lose your earnest money. Be sure to discuss with your realtor whether waiving contingencies is the appropriate move for you.
Appeal to Emotions
Tugging a bit on the heart strings of the homeowner(s) doesn’t hurt when trying to win a bidding war. Buying a home can undoubtedly be an emotional experience on both the buyer and the seller’s side. It’s natural for people to have a hard time letting go of their home, so a personal letter expressing your love for the home could go quite a long way. Within the letter, be genuine. This isn’t guaranteed to work on every seller but lets them see that you’re human too and would take care of the place they once made many memories in.
Build up Your Savings
Having an abundance of savings in the bank is another way to help your case during bidding wars. Not only does this allow you to increase the amount of money to put towards a down payment, but it also avoids needing a seller assists to cover closing costs. Putting a larger down payment on the house lessens how much you have to borrow from the bank, which means you’ll be capable of offering more when bidding.
Closing costs can burn quite the hole in your pocket, so making sure you have enough saved up to cover them is crucial. If you can’t afford it up front, you may need to request what is called a seller assist in your contract. A seller assist is exactly what it sounds like: the seller helps the buyer by providing a credit to cover some of the closing costs. As you’ve probably already figured out, this isn’t ideal for the seller, so being able to pay for closing costs gives you major leverage in a bidding war.
Be Flexible with Closing
Finally, try not to be dead set on a specific closing date. If a seller is aware of this, they may be less inclined to accept your offer because let’s face it, life happens and dates can move around at any time. If feasible for you, put yourself in the seller’s shoes when negotiating a closing date and accommodate to their needs. Letting the seller know that you are flexible with closing times can ease their stress, making you stand out as a candidate for the home.