Strategies for Winning a Bidding War
Oct 27, 2017 | Buyer Education
In today’s economic climate, it’s no secret that the housing market is extremely competitive. Buyers need to move quicker than ever, with homes receiving multiple offers and prompting bidding wars. Consider our suggestions below to help you obtain the home of your dreams without over-paying for it.
Make it Personal
While most buyers are focused on their emotions, it’s important to remember how emotional it can be for the person selling the home. In many instances, the seller may find it important to select the “right” buyer who they believe will value the home and cherish it in the way they did.
If you sense this is the case in your buying situation, try writing a personalized note about why you love their home and how you can see yourself or your family living there. You can even include a photo of your family members and pets for an additional touch!
Include an Escalation Clause
An escalation clause—a clause stating the amount of money you agree to increase your offer by if additional bids are received—is a great way to show the current homeowner how serious you are about purchasing their home.
For example, let’s say the purchase price of a home is $400,000, but you expect competing bids to go as high as $450,000. You can include an escalation clause that says you’re willing to go as high as $460,000 omitting the need to counter-offer every bid that comes in under your budget.
Be sure that you write in your clause that the seller can only take the winning bid up to a specific amount above the competing offers. That way, if another potential buyer offers $430,000, you will only spend $431,000 (instead of $460,000).
Pay Cash or Get Preapproved
Sellers typically prefer a buyer who can pay cash. If you can afford to do so, you will have a leg up on your competition.
If you cannot afford to pay in cash, be sure to get preapproved by a lender with competitive rates. While a lender cannot fully commit to providing the money you need until after you submit a full loan application, you will have a letter to show sellers exactly how much you are qualified to borrow, assuming no negative change in your verifying information.
Apply for a Mortgage Today
No matter what type of loan you’re looking at, the professionals at Home Point Financial can help! Please contact us today or visit a branch near you to learn more about your options, or to apply for a mortgage loan.