Home Buyers
How to Win a Bidding War
In the current housing market, there are more buyers than there are available homes. If multiple people want the same home, a bidding war may ensue. A bidding war occurs when several buyers repeatedly improve their offers until one buyer “wins.” Offers normally involve an increase in the offer price but can also involve non-financial incentives.
This can increase competition and make buying your dream home more difficult. HomeHunt understands the stress involved in a bidding war and how to avoid this challenge. Here are a few ways to beat the competition and close on the house you want.
Research the Local Market
Before you make an initial offer on the home you want, make sure to research the local market. It is important to understand the initial asking prices, how long homes stay on the market and the final sale prices. By looking at these factors, you will better understand how competitive the home buying market is.
Start your research by looking at comparable sales in your desired neighborhood. To figure out the value of your desired home, you need to find homes that are similar in size, condition, and location. You can do this research yourself or ask your real estate agent for a list of comparable properties.
Write a Letter to the Seller
If a seller has multiple offers presented to them, you can make your offer stand out by writing a letter to the seller of the home. This is a way to potentially win a bidding war without investing more money into your offer. A sincere and genuine letter can tug at the seller's heartstrings, especially if you state your future plans for the house. Do not underestimate the power of words, especially when it comes to buying a home.
Offers
If you are able to make an all-cash offer, this can be a strong advantage during a bidding war. There are fewer chances that the deal will fall apart with a cash offer and will show the sellers that you are serious about the purchase. Cash transactions can typically sell much quicker and improve your chances of winning the bidding war.
Waive Financing Contingency
During a bidding war, buyers want the ultimate goal to be closing the deal as quickly as possible. Waiving your financing contingency is a successful strategy to win a bidding war. A financing contingency is a stipulation in your offer that states that you will only purchase the home if your loan is approved. Waiving this contingency shows the seller that you have confidence in your loan funding.
Escalation Clause
This type of clause is a way to increase your offer automatically if there are other offers on the home you want. An escalation clause states that you are willing to pay over the expected closing price. By offering a bid over the expected selling price, you incentivize the seller to go with your offer.
Place the Highest Bid
One of the best ways to win a bidding war is to place the highest bid. This is the easiest way to end the bidding war and ensure that sellers take your offer seriously. Most sellers want the best price for their home and coming in with a high offer can get a seller’s attention.
Bidding wars can be challenging, but it can be less stressful with the right real estate agent on your team. Contact our team at HomeHunt today to let us match you with a great agent in your area.