How To Win A Bidding War

When something is desirable, the chance that one only person views it highly is slim to none, especially in the real estate world. Purchasing a home is typically for long-term purposes. Without a doubt, you want to obtain the property that your heart and mind has fallen in love with. Nothing in life is guaranteed. This concept also applies to the home-buying process. Hearing that has made your jaw drop, I know! But, these days, the market that you’re shopping in is very competitive and an abundant amount of people have the same intentions when submitting offers for hot and popular listings. This is where competition is factored into the equation and a bidding war arises. A bidding war occurs when there are multiple buyers engaging in the same property. Each buyer will make a more attractive offer to one-up the others. The price tends to increase higher than what it was listed for. When you’re involved in a real estate transaction, it’s safe to say that you want to be on the winning side. The homebuying process can feel impossible and overwhelming at times due to instances like this. You’d certainly be in a better position to win the home you want with a knowledgeable realtor and a few simple tricks that I’m going to share with you. 

Large Down Payment

Failure to obtain a loan or finances from the bank is one of the main reasons why transactions do not make it until the end. Let’s say you have one buyer who presents a 3% down payment and a second who can afford 20% +. The client who presents the greater number is in a better position to have their offer accepted. Low down payments are sometimes seen as risky. The seller’s will be more relieved knowing that you have the funds to cover a good portion of the overall cost. It shows more commitment to closing and the more money you put down, the easier it will be for you to be approved for that loan which again, is an essential part of the home buying process if you are not paying entirely in cash. 

Limit Inspection And Appraisal Contingency

In today’s market, it is common for people to buy homes in “as-is” condition, tackling the overall risks that come with it. “As-is” condition means exactly what it sounds like; that a buyer is willing to purchase the house in its current state, regardless how big or small any present issues may be. If this isn’t your preferred course of action and you don’t want to wave inspection completely, there are other routes you can take. Inspection can be limited to structural, foundational and termite. Those are the big ticket items that you should look into. This will make the sellers comfortable. It indicates that you won’t try to get your money back during inspection by negotiating on cosmetic issues, for example. You can do the same in terms of appraisal. Instead of waving it altogether and taking on the risk of paying cash in case of under appraisal, you can put a cap on the appraisal amount. An “ X” amount of dollars can be designated. That number specifies that you’re going to fill in the difference, if need be, with that money. This also makes the sellers confident. It shows that you have the funds to proceed with the transaction in case the property under appraises for whatever reason. 

Propose An All-Cash Offer

Most of the time, buyers are heavily reliant on a lender to manage their finances. In order for a transaction to close, the lender must evaluate the actuality and capability of the client paying back any loans. When the buyers’ financial state is assessed, appraisal and other factors must be taken into consideration as well. Cash removes the lender and appraisal out of the picture completely. For that reason, submitting an all cash offer visually looks more appealing to sellers. This is because the buyer isn’t dependent on a loan or finances from anyone else. It proves that the buyer has enough money and liquid assets available to pay the cost in full right then and there. This also enables the closing date to be sooner. While a non-cash offer may take 30-60 days, a cash offer will close much quicker. You are not waiting on a bank or another person to fulfil their duties during the transaction. 

Attach A Sympathy Letter

Money isn’t always everything. Knowing someone on a personal level can also be very important. We usually just know someone’s name, but not their story. Explain yourself and what you’ve been through, personally and financially. It can trigger the seller’s soft side. Hearing a sensitive or touching story could unravel feelings that they didn’t know they could have towards a stranger. Sharing deep information may initiate a spark and the buyer may not be seen as stranger anymore. Both parties usually end up connecting on a different level. Therefore, a letter can definitely make someone more accepting about passing on their home to you.