Bidding wars are common occurrences in the real estate market, especially when it comes to high-end properties in desirable locations. However, regardless of the property or the amount of money involved, it is always a good idea to be prepared for a bidding war.
Make your offer more appealing
Generally speaking, you should consider yourself in a real estate bidding war if one or more competitor puts in an offer for a home against yours. There are a number of ways to better your odds in this situation. While focusing your strategy on the price of the home is one method, another approach is to adjust the terms of the agreement. In other words, simplifying the terms of your offer can appeal to a seller if your competition has put in a bid at the same price. In such a case, the seller is likely to choose the buyer with the most agreeable terms, which are also usually the most simplified terms. This could, for instance, include adjustments like limiting the terms that require the seller to cover costs associated with the real estate transaction (e.g. costs of inspections and home improvements).
Have proof of financing at your disposal
One of the strongest bargaining chips that you can use to win over your seller is proof of financing. Home sellers would much rather enter into a sales agreement with a buyer who has the funds to make the purchase immediately. Regardless of how much you offer to pay for the home, the seller is more likely to choose a buyer who is actually ready to make the purchase. Unless you’re making an all-cash offer, you should think about shopping for a mortgage months ahead of time. Getting pre-approved for a mortgage is a must if you want to have a chance at a bidding war.
Contact your seller personally with a letter
Another tactic when making a bid on a house is to contact the seller personally. This is typically done by writing a letter to the seller with the purpose of convincing them that you should be the new owner of the house as opposed to the other buyers who are involved in the bidding war. This letter is typically delivered by the real estate agent you are working with for the transaction. They will provide a delivery service of sorts to the seller, which is often the best option considering most sellers prefer reading the letters in private.
Hire a real estate agent who knows how to negotiate
Lastly, a skilled real estate agent can be an invaluable resource when you find yourself in the midst of a bidding war. They will provide you with their negotiation skills as well as expert advice on how to edge out other prospective buyers. A real estate agent among other industry professionals can provide you with all the necessary tips to not only win a bidding war, but to do so in the most advantageous way. In case you do not win the bidding war, they will be able to provide you with the best actions moving forward. You will have a distinct advantage over other buyers when making a bid on a house by working with an agent you can trust.
Enter into the market prepared for any situation, including a bidding war. Overall, buying a home can be an exciting experience as long as you are well equipped.