How To Win a Bidding War: Competing With Other Buyers to Buy a Home
When there are more buyers seeking homes than there are homes for sale, that makes every home a hot commodity. And when multiple people are all vying for the same home, that means there’s a good chance the homeowner will open the floor for a bidding war so they get the best possible offer on the home. A bidding war can sound scary, especially to someone who has never purchased a home before, but it’s possible to be ready for one. Here are a few different ways home buyers can help themselves come out of a bidding war a winner.
Be Preapproved For a Loan
Getting preapproved is a step all home buyers should take before even looking at homes for sale. Being preapproved means the buyer will have written proof from a lender that they’re authorized for a home loan, which many sellers love to see when considering offers. Getting approved for a loan can take quite a bit of time, and if the market is moving fast and the sellers want to close quickly, getting preapproved can mean the difference between acceptance and rejection.
Use an Escalation Clause
In a bidding war, one of a buyer’s worst fears is to be outbid. To help prevent this, buyers can add an escalator clause into their offer that will increase their offer to compete with other higher offers. An escalation clause doesn’t guarantee that the buyer will pay the maximum price they’re willing to, or in other words, if a buyer says they will pay up to $250,000 for a home, but all other buyers drop out of the bidding at $230,000, the first buyer will pay $230,000 instead of the higher amount.
Keep Contingencies To a Minimum
Contingencies are meant to protect home buyers from bad deals, but it can be off-putting to sellers if there’s too many. Most sellers want to sell their home quickly, and having to deal with numerous contingencies can slow down that process. If the buyer insists on using contingencies, try to keep it to just common ones and as few as possible.
Be Flexible Around Closing
Sellers will typically have an idea of what they want their schedule to be regarding closing. A good way to appear more attractive to sellers is to ask what their schedule is and offer to work with it. Of course, there will be cases where the buyer physically cannot be flexible, but it never hurts to be open and willing to try to work with the seller.
Offer More Than the Listing Price
One of the easiest ways to get a seller’s attention in an offer is by letting the money offer speak for itself. By offering more than the home’s asking price, a buyer can show the seller that they’re serious about purchasing the home. Offering more can also help put the buyer’s offer above other offers, which is one of the most common ways to win a bidding war.
Write the Owner a Letter
One way buyers may win the seller’s favor is by writing a personal letter about the home. This can be a good way of making the seller feel at ease that the home will be sold to someone who truly cares about it. When writing a letter, try complimenting the seller on the gardens and landscaping or how stylish the new renovations are. Some sellers may find a heartfelt message more appealing than just a high bid.
When it comes to a bidding war, it’s ultimately going to come down to the seller’s choice for their Peccole Ranch home. They might find some aspects of an offer more than others, but it can never hurt to try using any or all of these strategies.