In this day and age real estate bidding wars almost always happen since there are a limited amount of homes on the market. In fact, about 42% of people who bought homes during the pandemic engaged in a bidding war. Most houses currently for sale encounter several offers – and bidding wars can ensue.
When you have your heart set on a home it can be discouraging to hear multiple offers coming in on the property. So, how do you navigate that tricky situation?
The local experts from S&D Real Estate break down how to prepare for a bidding war so you don’t lose your dream home.
These are six strategies to help you win a bidding war:
Avoid a war if you can
The easiest way to win a bidding war is to make sure there isn’t one in the first place. This can be accomplished by asking your broker if the seller has a price in mind that, if you offered, would be bold and detaining enough to halt any potential conflict.
Have a pre-approval letter
In the case that you cannot avoid a bidding war, you may need to break out your secret weapon: a pre-approval letter, which comes from a lender and is evaluated based upon all your credit and asset information that is pulled by an underwriter. They then qualify you for a specific loan amount.
This letter signifies that you are a trustworthy buyer and can greatly increase your chances of having your offer chosen.
Make it rain
A cash offer usually holds the most weight in a bidding war. Not everyone can afford to pay cash, and if this includes you, make your down payment as large as you can. This shows your seriousness + ability to afford the property.
Squash contingency timelines
A contingency period allows the buyer to back out of the contract for many reasons. If the seller is looking to close the deal rather quickly, you could appeal to this desire by reducing the contingency period timeline. The inspection contingency is a great place to start. This period is typically 17 days, so try reducing it to 5 days.
Hire an experienced agent
Make sure to choose your agent wisely and do your research when looking through reviews of local agents. Pick an experienced agent who has been through this before. Meet the local agents at S&D here.
Write a personal letter
Writing about how much you love the property and paying several compliments to the owners on their home could give you a serious advantage over other bidders. A letter can help you stand out in the crowd of offers – but be sure to make the letter as sincere as possible.
Pro-tip: If you are absolutely set on the property, a sure-fire way to win a bidding war is to offer above the asking price. This works best when offering slightly above an even number. For example, if the asking price is $200,000, try offering $204,350 instead of $204,000. Ⓟ
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