How to Win Your Bidding War
The housing market can be extremely competitive. Bidding wars and people offering cash for homes can make it difficult to be successful. If you are thinking about entering, or already in the middle of, the home buying process, keep these tips in mind to be successful in winning the bidding war.
Show You can Afford the Home
One of the best ways to get a house is to show the seller you can afford the home with a preapproval letter. This confirms to the seller that you have gone through a lender and they have looked at your finances. It also shows them that you can afford the home and you are more likely to close on the home than buyers without the letter.
Have Money for a Down Payment
You should make sure you have enough money to put down a 20% down payment. This will make you more competitive with buyers who are coming in with all cash. This does not completely level the playing field but it will make it better.
Making a Solid Offer
You need to be sure that the first offer you put in is good enough to be considered by the sellers; if it isn’t, they will move on. If they don’t consider your offer, you won’t be able to make a bid.
Don’t Get Out of Hand With Contingencies
Sellers may get overwhelmed when you have a number of contingencies in your offer. These contingencies are safeguards for you as a buyer but can also protect the seller if you back out of the deal. You want to keep in contingencies like the inspection but take out contingencies like the date you will move in.
Being Able to Increase Your Offer When Needed
One of the most frustrating situations is when you miss out on a home by only a small amount. To avoid this happening to you, you can write into your offer that you will increase your bid by a certain amount if you are outbid by another buyer. This is called the ‘escalator clause’ and can get expensive if you are not careful.
Give the Sellers a Letter
A letter to the sellers can be a meaningful way to let sellers know how much you love their home. You can talk about how you see yourself living in the home and how happy you would be if you got the home.
Keep to a Schedule
You will want to keep to the seller’s schedule in order to be successful with your bid. Most sellers don’t like when the offer dictates a timeline for them to follow – especially when it does not match their own.
When it comes to winning bidding wars in the home buying process, being prepared to make a good offer is a great place to start. As you go through the process, be sure to keep these tips in mind in order to land you the home of your dreams.