Your home is like a personal castle and when you are out there battling other home buyers to win yours, it can seem like an endless game of chess. These intense bidding wars could even break out during a buyer’s market.
It could be difficult for a home buyer to hear that multiple home offers have come in for the house you have your mind set on. You will need a plan to win your dream home and a better understanding of what your home seller is looking for in a home buyer if it seems like a bidding war is about to start.
With this plan in mind, here are five ways to help you win a bidding war.
1. Avoid a starting a bidding war to begin with
Would you like to know the best way to come out on top in a bidding war? Make sure there isn’t one in the first place. Ask your real estate agent to see if the home sellers have a certain price in mind that would urge them to call off the bidding war. The home seller might make a bold offer on the price.
2. Obtain a letter that says you are pre-approved
Unfortunately, you cannot always prevent a bidding war from happening. In this case, you might need to dust off your weapons and join the battlefield. A pre-approval letter is one weapon you can use. But don’t confuse this with a pre-qualification letter. This means that a mortgage lender has looked over your creditworthiness and has made the choice that you probably will be eligible for a home loan up to a certain amount. This is only a general estimate. But a pre-approval letter will show that an underwriter has evaluated all your financial information and the mortgage lender is prepared to offer you a mortgage up to a certain amount money. Obtaining this pre-approval letter may push your offer ahead in the bidding war.
3. Make a cash offer
Everyone knows that cash is king and all-cash offers hold a ton of weight during a bidding war. If you cannot afford to pay your home in cash, you will need to make a large down payment. This will show the sellers that you are serious and are able to afford the home. Another way to show your sellers is by offering a higher escrow deposit. Contract deposits are usually ten percent, but a home buyer can offer to put more on the line. This move will reduce the risk to the home seller while increasing the risk for the home buyer because they stand to lose more cash. The third way to impress the home seller with a large amount of cash is to simply make an offer that is above the asking price. We recommend this strategy of offering slightly above an even number.
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4. Condense contingency timelines
A home buyer could back out of the contract for a variety of reasons during the contingency period. You could appeal to home sellers who are looking to close the deal fast by compressing your contingency period timeline. We suggest lowering your inspection contingency to five days. And the less contingencies you have, the better for home sellers. So you could make your home offer more attractive by including the bare minimum of contingencies. Many home sellers do not want to risk having to put their house back on the real estate market because a home sale fell through because of a contingency. A clean home offer is much more appealing.
Do you have a question about bidding wars? Call 949-392-6400 to get in touch with the Reed Team today!