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How to Win a Bidding War on a House

How to Win a Bidding War on a House

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How to Win a Bidding War on a HouseHave you heard bidding wars are back? For the past year or so, the demand for homes has increased yet at the same time the supply of homes is becoming more limited. This time last year there were 32,808 homes on the market for sale, and this year that number is just 24,448, a decrease of 25%. A combination of fewer homes on the market and more buyers is a recipe for multiple offers on homes, which can trigger bidding wars.

Offering the highest price might seem like the best way to win a bidding war, but home sellers consider other factors when accepting offers on their homes.

Do you have a strategy to win a bidding war for a home without overpaying?

John and Anthony on How to Win a Bidding War on a House

One of the first steps you should take when buying a home is to hire an experienced buyer’s agent who can show you homes as soon as they go on the market. This way you can see the home as soon as possible and move fast if you want to make an offer. Your agent will also help you prepare for the home buying process and provide you with all the data and analysis you need to compare properties and arrive at the right price that works within your budget.

Here are a few steps you can take to win the bidding war and get the house you want.

1.       Have an Updated Pre-approval Letter in Hand

Have your pre-approval in hand even before you start looking, and have it updated every 30 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. Getting pre-approved will make the mortgage application process smoother since you will have already spoken to a mortgage broker and gathered the documentation necessary for the loan. And 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.

2.       Make it Personal

Writing a letter to the seller about why you are the best person to own the house can help to humanize the transaction. 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 can easily connect with a buyer who expresses how much they love the neighborhood or will maintain the garden they planted.  A personal letter can give you an added advantage when it comes time for the seller to accept an offer.

3.       Keep Contingencies/Demands at a Minimum

A seller will often 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 may 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.

4.       Make Your First Offer Count

Speak with your buyer’s agent about what your first bid should be, and make sure it’s your best. 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 in 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. Just stick with your original budget and strategy and the right home will be yours before you know it.

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