If you are trying to buy a home right now you have probably realized that competition is fierce! We experience this every year in the late winter and very early spring. Therefore we are right in the midst of it. The reason this happens is simply supply and demand. At this time of year there are more buyers than sellers so as soon as a correctly priced home comes on the market buyers dive all over it and it sells. We described how this happens and how it can work to a sellers benefit in a blog we released last month Why every seller who wants to sell this Spring should list NOW! This year does seem to have especially high demand. The mild winter weather, low interest rates and a stronger economy are all factors that are contributing to this strong demand.
Periods like this can create frustration for buyers but the good news is it will not stay like this forever and as we get into April and May more and more homes will come up for sale. If you see the house of your dreams between now and then you should take your best shot at it. Here are some proven tips to winning a bidding war:
Experienced Buyer’s Agent
The Importance of Having a Buyer’s Agent in a multiple offer situation really cannot be emphasized enough and it is the first step you should take when setting out to buy a home. They will guide you through the entire Home Buying Process and provide you with all the data and analysis you need to compare properties and decide How Much to Offer on a home in a bidding war situation. They will prepare you for what is to come each step of the way and give you very valuable insight into how to negotiate in a multiple offer situation.
Have an Updated Pre-Approval Letter in Hand
Have your pre-approval letter in hand even before you start looking, and have it updated every 14 days so you don’t miss out on getting the home you want. Make sure the amount you’re pre-approved for is the amount you’re offering on the home. If you want to make an offer on a home that is priced above what you’re pre-approved for, get it updated to match that amount so long as you qualify. Getting the Right Mortgage Broker and obtaining a pre-approval ahead of time is a must in order to buy a home in this market. If there are multiple offers on the home, having a recent, up-to-date pre-approval letter is a distinct advantage over a buyer who doesn’t.
Make it Personal
Writing a letter to the seller about why you are the best person to own their home. It may help to humanize the transaction. Most sellers want someone to love the house as much as they did. Tell the seller why you love the home, why you would be the best owner for the home, and tell them a little about yourself so the seller can picture you as the owner. A home seller may connect with a buyer who expresses how much they love the neighborhood or will maintain the garden they planted. A personal letter may give you an added advantage when it comes time for the seller to accept an offer.
Keep Contingencies/Demands at a Minimum
A seller will prefer a buyer who doesn’t put any contingencies in their offer, such as having to sell an existing home before they can purchase a new one, or having a home inspection done. Although we generally do recommend that buyers have a home inspection, in a competitive situation it can help not to. Keep your demands at a minimum as well. Too many back and forth negotiations about repairs or appliances will make the seller turn to another buyer. Only request what is necessary. If you must have contingences such as a home inspection, make sure the timelines for them are short so you get it over with as soon as possible.
Make Your First Offer Count
The most popular question that Realtors receive from buyers is How Much Should I Offer? Speak with your buyer’s agent about what your first bid should be, and make sure it’s your best. Also be aware that you will not be able to find out what the other buyers are offering. You will often only get one chance to bid on a home, and an experienced agent will know the market and what the best offer will be for your budget. Don’t waste your time – or the seller’s time – with a lowball offer.
Above all be patient! Don’t get caught up with emotions when presenting your offer or take it personally if your offer is rejected. There are many factors in play during multiple offer situations, and you won’t always know all the reasons why a seller chose another buyer.