It can be incredibly exciting to finally find your dream home and put down an offer. However, you’ll want to be aware of the possibility of other potential buyers who have their eyes on the same property. In this instance, you’d compete with them to become the owner of the home. To ensure you’re well-prepared for this scenario, learn about some of the most common and effective ways to win a bidding war below!
1. Increase your offer
Probably the best (and most obvious) way to win a bidding war is to outbid the competition. You may not even have to increase your offer by much – a couple thousand dollars might seal the deal. Before you decide on anything, be sure to ask your real estate agent for guidance. If you do increase your offer, keep in mind that this may have to come from your own pocket as lenders typically only let you borrow up to as much as the appraised value of the home.
2. Make sure you’re preapproved
Although optional during the homebuying process, getting preapproved puts you at an advantage over other home shoppers who aren’t preapproved. A preapproval will show the seller that you’re a serious buyer and your financing for the purchase has been conditionally approved.
3. Write the seller a letter
A surprisingly effective strategy to win a bidding war is to write a letter to the seller. When you write about your situation and why you want to be the owner of their home, the seller may be drawn to your story and connect with you on a more personal level. They may also feel more comfortable choosing a buyer who they know will value their home as much as they did.
4. Be flexible
By finding out what the seller wants out of the sale and adjusting to their needs, you can put yourself in the best position to become the next owner of the home. This can include simple concessions such as allowing them to keep their appliances, not requesting they make renovations or being flexible with your closing date. You may also want to consider waiving as many contingencies as possible, including the financing contingency or home inspection contingency. There is a risk to doing this, however, so make sure you discuss with your real estate agent and loan officer before making any final decisions. The more flexible you are, the more likely the seller is to accept your offer.
5. Pay in cash
Although not everyone can afford it, paying in cash has a huge advantage over non-cash buyers. This shows the seller you’re serious and eliminates the appraisal and financing steps, often making for a faster and more reliable transaction. After your purchase, you may then be able to recoup most of your cash by getting a mortgage for the home through a process called delayed financing.
Before you even find yourself in a bidding war with another potential buyer, make sure you have these strategies equipped to be as prepared as you can be! If you’re considering buying a home, getting “mortgage ready” is an important first step to becoming a competitive homebuyer. If you’d like a free mortgage consultation, want to get preapproved or are interested in learning about options like delayed financing, get in touch today!