You’ve been house hunting for weeks, possibly months, and you’ve finally found the ONE! Unfortunately, you’re not the only one who thinks you’ve found the perfect home, and now you’re faced with a bidding war. What is it? When should you stay out completely? And when should you just walk away?
What is a bidding war?
A bidding war is a real estate term used when a seller receives multiple offers on their home in a short amount of time. Unfortunately, it also means the seller can wait and see if buyers are willing to raise their offers and make concessions in their efforts to make sure their offer is the most attractive. A bidding war is a tight spot for a homebuyer; however, with an experienced REALTOR®, you can navigate the process to win the home of your dreams, stay out of the war, or know when it may be time to just walk away.
When to stay out of a bidding war?
There are times when it does not make sense to get in a bidding war on a house no matter how much you love it – for instance, there are multiple cash offers way above asking price. Keep a steady check on your emotions and be able to let go and move on to another house that will fit you and your families needs, as well as your pocketbook.
When to just walk away?
There are also times you find yourself in a bidding war already, but it may be better to just walk away. Consider bowing out under the following conditions:
The home needs major repairs. If you anticipate the home will need major repairs with an outlay of cash, you may be better off looking for another house. A bidding war could eat up funds you were planning on using to make these repairs and leave you stranded with a home you can’t afford to fix.
The home is already at the top of your budget. If you’ve made your best offer out of the gate, which you should in a competitive market, you should stay out of a bidding war. Chances are you’ve been preapproved for a certain amount, and the house may not appraise for the higher price bidding wars often lead to. If that’s the case, the bank may reject your mortgage or cause you to reach deep to come up with the funds in cash to make up the difference. Hold firm to your budget and know when to walk away if need be.
Getting into a bidding war is stressful. Know when to fold and find a new home by preparing in advance and keeping emotions in check.