If you’re looking for a home in a big city, you may find yourself in the midst of a real estate bidding war. Here are five ways to win it.
If the supply of houses in a particular neighborhood you are interested in is low and demand is high, and the mortgage rates are also in an affordable scale, multiple offers from eager buyers can flood in – all of which can push prices even higher and make you feel like you’re trapped inside a Hunger Games arena.
Take heart. Believe you won’t perish in the process even if you’re edged out multiple times in the past when trying to buy a home.
The first and most sensible strategy you can make to ‘make the odds be in your favor’ is to hire an experienced, professional real estate agent. Choose someone who is thoroughly familiar with your local market and has the fearless edge to enter tough negotiations for you.
With heavy backup during your real estate bidding war, don’t forget these 5 tips to make that coveted property yours for the taking.
Having someone on your side who knows your local market thoroughly — and can guide you through these sometimes tough negotiations — means you’ve got heavy backup when you enter a bidding war.
1. Get a preapproval letter from your lender
A pre-approved status is not the same as being pre-qualified. While the latter confirms your current annual income, financial assets, credit profile and capacity to pay, the former is what is most important if you want to have a considerable advantage over all other prospective buyers.
2. Increase your offer
This can be done up to a certain limit so as not to put you in a tight spot or bring you to financial ruin through an escalation clause. It works pretty well especially if you’re in a multiple-bid situation.
Strengthen your offer and up your chances of securing the deal by matching another offer up to a limited amount so the seller can prove your strong interest on the property.
Nevertheless, it is still pertinent to stay within your budget and be willing to walk away if another bidder has made an offer beyond your capacity to pay.
3. Don’t make too many demands
In a multiple-bid situation, sellers have the upper hand. And they would rather choose to deal with serious buyers with few or no contingencies at all.
If your eye is set on owning that property, refrain from making excuses, delays, or extra requests to avoid getting a resounding ‘NO’ from the seller.
4. Consider the seller’s convenience
Even if another buyer outbids you by a few thousand dollars, it’s still not really over for you. You can turn things around and move it towards your favor by extending courtesy and understanding to the seller’s situation.
You can do this by either by pushing back the closing date so they can still have more time to move out, or by offering to close in a shorter time to avoid dealing with issues such as liability, theft, holding costs and hazards that a vacant home presents.
5. Don’t lose hope
There are times when other buyers make offers way over the asking price. Don’t walk away just yet. Deals like these usually have very high cancellation rates, meaning, your offer can be once again attractive for the seller.
What you should do is have your agent keep in touch with the seller – if you’re still interested in the house.