The HustleIssue #163Sunday, June 13, 2021Why is lumber is so expensive right now?An illustrated explainer of the factors driving up the market.BY ZACHARY CROCKETTNOTE: Thie week, we&rsquo
How to Win a Bidding War Using 7 Key Tactics
Dated: August 11 2020
You’ve been budgeting, saving for a down payment for your dream house and you’ve finally found it. The house has everything you want, from beautiful landscaping to an open kitchen and a spacious master bedroom that’s just waiting for you to call it “home.”
The problem is that other people are home buying, too.
As a buyer, you must be prepared to make a bid, often lower than the maximum amount you’ll be willing to spend. Sometimes, the first bid is accepted, but if another eager buyer puts a bid on the home, you must be prepared to enter a bidding war.
Winning a bidding war can be difficult, but these tactics can help:
1. Increase Your Bid
Sellers want to maximize their profits, and one of the key ways to win a bidding war is to offer the highest price. One method is to do your research and find out what the home is truly worth. If you find that the house is worth 20% more than the list price, you may want to put in a bid that’s 5% or 10% higher than asking price.
Increasing your bid, especially to above asking price, will get the attention of the seller.
But it’s up to you to find what you think a “fair price” will be.
2. Let Go of Your Contingencies
Sellers want to do as little as possible to sell their homes. When home buying, it’s not uncommon for the buyer to request a fresh coat of paint or to have certain items fixed in the home before purchase.
If you let go of these contingencies, or at least some of them, you may be closer to winning the bidding war.
3. Show Your Pre-Approval
Pre-approval is a major factor when placing a bid. If you can show the buyer that you’re pre-approved, you have a higher chance of winning the bidding war. Buyers that do not have pre-approval are a higher risk that most sellers want to avoid.
4. Write a Letter
Sometimes, sellers have an ideal buyer in mind. Write a letter to the sellers. Show them that you’re friendly and describe how you would make their house your home. The more the seller can relate to you and sees that you would be a good fit for the home, the more likely they are to select your offer.
5. Pay Cash
If you can’t afford to pay cash, skip this tip. But if you can pay cash, it’s preferred, as sellers don’t have to be concerned with buyers receiving the actual financing that they need before the sale goes through.
6. Increase Your Deposit
Want to show the seller that you’re serious about buying the home? Increase the earnest money you’re willing to offer. The funds will be put towards your closing and down payment costs, but it shows sellers that you’re serious about buying their home.
7. Ask for an Escalation Clause
When placing your bid, you’ll want to ask for an escalation clause. This type of provision will allow you to bid if another potential buyer outbids you.
The trick with this type of clause is not to get carried away and to put a ceiling on how high you’re willing to go.
Some buyers get very competitive during a bidding war and will offer more than the home is worth. Don’t let emotions get in the way of making a smart bid on the home you want to buy.
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