A bidding war occurs when two or more buyers are interested in a home and continue to make higher offers they are willing to pay for the property. This is usually fast-paced, meaning buyers will have to make less thought out decisions. While bidding wars may be the dream for a seller, they can often lead to buyer’s remorse. As such, be sure that you really want a home before you continuously put in more bids. Bidding wars are exceedingly common in a seller’s market.
How to win a bidding war
Price is important, but not everything
Price isn’t the sole thing sellers take into consideration when deciding which offer to choose. In fact, for many sellers, the price may be a secondary consideration to many other factors. Consider whether the sellers need to close quickly. If you have pre-approval and all your paperwork in order, you can use the promise of a shorter close to your advantage.
Have a face-to-face conversation
Sit down with the seller’s agent to find out why the sellers are moving, and use that information to your advantage. Find out if they are selling for the money, if they are moving for a job, or are just under pressure to get rid of the house. Any information can help you in a bidding war.
Get a pre-approval letter
Getting pre-approved greatly helps your chances in a bidding war. Submit all financing documents to your lender before considering houses and writing any offers. Include your pre-approval letter with your offer. This shows sellers that not only are you serious about purchasing the home, but they won’t have to wait and see if you will be able to pay the amount you offered.
Be flexible, but firm
To win a bidding war, you must be flexible. However, make sure not to bend your offer or terms too much.
Limit the contingencies
In a bidding war, sellers have the upper hand. They will want to see clear and concise offers. If you know there are a lot of offers coming in on the house you want, avoid having too many contingencies in your offer.