The housing market is hot. How hot? Consider this: Homes stayed on the market for an average of only 24 days in April and inventory continues to be low. As a result, buyers may find themselves in a multiple-offer situation, aka a bidding war. If you’re going to win this battle, you need a plan. Your weapons are financing, representation, flexibility, escalation, tenacity, and love. These are the strategies for home bidding success.
Think Financing First. There’s no question that a verified cash offer is likely to be the sellers’ favorite. The transaction won’t be contingent on financing, and that’s attractive. However, cash offers are less common than offers requiring financing. Strengthen your offer by getting your financial ducks in a row. Do it before you start looking for a home. Meet with a First Choice Loan Services Inc. mortgage loan originator to find out how much you can borrow and what loan programs are available. Make sure your offer includes a First Choice Priority Buyer Letter, confirming that you are financially qualified to buy.
Work With A Realtor®. It’s tempting to look at homes on the internet, attend a few open houses, and make an offer on something you like. In a seller’s market, having your own Realtor® may be critical to your success. A knowledgeable real estate professional can guide you through the challenges of finding and buying a home. Realtors® often know about listings before they come on the market. They understand how to write offers. They know about values based on similar homes that have sold recently. Find a real estate professional you trust, and listen to their advice.
Be Flexible. Imagine you’re the sellers. You have several offers to review. One includes multiple contingencies. They want you to fix the fence, leave the washer and dryer, buy a home warranty, and close in 21 days. Another offer includes only the basic contingencies, like a home inspection and financing, and they are open to a later closing date or a short leaseback if you need time to move. Even though the more complicated offer is higher, you decide to pass it up in favor of the offer that makes fewer demands. Remember that it’s not all about money, and think carefully about contingencies and closing dates.
Raise The Bid. Ask your Realtor® if an escalation clause would make your offer stronger. If you include this provision, you agree to pay a certain amount above the highest offer, with a cap on the amount you’re willing to pay. The sellers could choose to accept your offer, or they might decide to engage in negotiations with a different buyer in hopes of obtaining a higher price. If you want to use an escalation clause, you may want to consult a real estate attorney for the proper wording.
Don’t Give Up. You found a home you love, you made a strong offer, and you lost to another buyer. Guess what? Deals fall through all the time. If you really want the home, ask your Realtor® to stay on top of the sale and let the sellers’ representative know that you want to be in a secondary position in case the transaction doesn’t go through. Your back-up offer could become the winner.
Send A Love Letter. If you’ve never heard of this it may sound odd, but it can work. Include a love letter with your offer. Tell the sellers why you love their home and what it will mean to you and your family to live there. Be genuine, speak from your heart and share your reasons for wanting their home.
Whatever you do, don’t lose hope. You may lose a bidding war (or two, or three), but your new home is waiting for you.