Typically, when a market is low on available houses and high on buyers, a majority of the sales completed involve a bidding war. This can be bad news for home buyers who are not ready for the competition.
Even though home buyers do not like to find themselves in a bidding war, it happens. But when the home of your dreams is on the line, you need to be ready to close the deal. Doing so means avoiding the following common bidding war mistakes.
Home buyers might not immediately understand that they are about to find themselves in a bidding war. Thankfully, there are signs to look for that can signal “bidding war ahead” and help you prepare.
For example, if you are not alone when attending the open house, you can be fairly confident that other offers will be in the mix. Or, if you see that there are multiple showings scheduled, that can mean that the sellers are expecting a lot of visitors.
But maybe the easiest way to get a feel for the landscape is to simply ask the seller’s agent if there are other offers on the table. If you find out that other offers have been made then you know you need to come in with a strong offer from the start.
Sellers are looking for the path of least resistance in getting a deal done. In other words, they want to work with a buyer who is going to be a ‘sure thing.’ In order to prove that this is you, buyers need to do everything they can to strengthen their case to win a bidding war.
To start, include in your offer a pre-approval letter from your lender. This shows the sellers that you are a serious candidate in the bidding war.
It can also help to include a cover letter with your offer, detailing what you love about the house. By including some personal information about yourself you can connect with the seller, revealing some insight into whom they will be working with.
The quickest way to exclude yourself from a bidding war is start with a lowball offer. Your offer is going to be compared with the others. If it does not come close, the sellers will not give you a second look.
Keep in mind that there is a time and place for negotiations. A bidding war with other qualified offers is not the right situation. If you are serious about the home, put together what you believe is your strongest offer and submit.
Speed kills. But so does being slow. Especially when it comes to a bidding war.
When you are participating in a bidding war, you need to be ready to respond to any and all requests as quickly as possible. Otherwise the seller will simply move on to the next offer.
The bottom line is that a bidding war is not necessarily ideal for a home buyer. But it does not mean that it also needs to be super stressful. The important things to be prepared for are the fact that you are competing with others – which means that you could get caught up in the process and offer beyond a price you are comfortable with – and being prompt every step of the way. By being organized and informed, you will be in a position to land the house you want.