You’ve decided you just can’t live without this home, now you want to WIN! Here are some tips to get that home (with your REALTORS® help, of course!)
Get pre-approved. Smart homebuyers are pre-approved before their home search so if this situation arises, you’re possibly already one-step ahead of the competition. This pre-approval letter lets the seller know you’re already on your way to mortgage approval for a home you can afford and a good prospect to close on the home.
Present an all-cash offer. If you can afford it, offer cash. This eliminates the need for an appraisal, bank approval for a loan, and contingencies that may be required by lenders. It also lets the seller know you can buy the house TODAY.
Increase your offer. Ask your REALTOR® for guidance on an appropriate amount for your counteroffer. With an increase in offer comes an increase in mortgage payments – you want to make sure you stay within a monthly amount that you can afford. Also, if financing, the home needs to appraise for the amount of your offer or you could be faced with your lender denying the mortgage or a lot of cash out of pocket to make up the difference in value.
Eliminate contingencies. Most of the time, your REALTOR® will advise you to keep certain contingencies to protect you from issues with a home. If you want to come out on top of a bidding war, you may need to eliminate as many contingencies as possible, but be careful here, the more you eliminate, the greater your risk and less protection you have in buying a particular home.
Use an escalation clause in your offer. This lets the seller how much you are willing to raise your offer if competing bids come in. Always include a price you won’t exceed. Most REALTORS® do not recommend an escalation clause because it shows your hand for future negotiations and lets the seller know exactly how much you are willing to pay, but it can help lead to a successful result in a highly competitive market.
Be flexible on your closing date. Sometimes, being flexible can be as attractive as a higher price. If you don’t need to move by a specific date, consider giving as much flexibility as possible to the seller on closing date, making repairs, and other important deadlines.
Increase your earnest money. This lets the seller know you are very serious and that you don’t need your lender to increase the loan amount.
Write a personal letter. Although the jury is out on whether a personal letter is a good idea or not, there are times when a sincere expression of how much you love a home can tip the scales with a seller.
Listen to the advice of your REALTOR®. An experienced and knowledgeable agent can help you gain the upper hand in a bidding war, let you know which strategies may be most attractive to a particular seller, and also keep you realistic and grounded in knowing how far you can and should go to win the war.