How to Win a Bidding War on Real Estate

Now that 2013 is behind us and we look ahead to 2014, home buyers probably will not have the competition with investors as they had last year. With so many short sales and foreclosures slowly trickling off of the market, investors will not be out in droves as they once were. However, buyers still may find themselves in a bidding war and it’s best to know how to handle it.

Being financially prepared is one of the first things you need to do in order to even consider winning a bidding war. By preparing yourself, gaining knowledge on how to play the game, and arming yourself with a great buyers agent you can be several steps ahead of your competition. If you have all of your finances completed, meaning you spoken with the lender, have a letter of preapproval, and are prepared to put an offer down on the home today, you are miles ahead of those that haven’t even spoken to a lender yet.

Speaking of lenders, it’s always best to have a lender in your back pocket to contact when the time comes. The preapproval process is absolutely essential to getting what you want in a bidding war. Even though cash buyers may have the advantage having a copy of your proof of funds along with your offer and a strong preapproval may put you ahead in the end.

You should also think about having at least 10 to 20% down if you can. Sellers see that you are a serious buyer and willing to put a lot of money on the line in order to get the house.

Minimize your contingencies if you can. You want to avoid adding conditions to your offer. If the offer is well within your budget, you might consider forgoing the inspection or other contingencies. This is a risky move so you want to speak with your buyers agent on the best way to go about this.

Bring your ‘A’ game. You want to bring your best offer possible. According to a recent article about winning in a bidding war, “this is where it’s keyed to do your research and find out the market value of the home by looking at other homes in the neighborhood. It’s also in your best interest to know how many other offers are being made, since the more offers there are, the higher the selling price is likely to be.” Try to offer the highest amount of earnest money possible and be prepared to offer the seller all the documentation that shows your source of financing and down payments. [Source]

Appeal to the seller in various ways. Perhaps the seller needs extra time to move out, the majority of their appliances when they moved or they need to take one or two things with them. Making it as easy as possible for the sellers to move on their own time make it your offer ahead of the rest.

You can win a bidding war but it takes a dedicated and aggressive agent that knows how to deal with bidding wars. Call the experts at REFindly.com for more information on bidding wars and getting the home of your dreams.