Do you want to outbid your competition and get that dream house, with all the features you need at an unbeatable price? Of course, it's not easy.
You need to know what you want and do your research to avoid getting ripped off. Plus, it would be best if you stayed on top of the game by keeping track of all offers without losing control in this high-stakes negotiation battle.
Here are simple tips for winning your next bidding war:
1. Have Your Preapproval Letter in Hand
A pre-approval letter makes you look like a serious buyer who is ready to buy right away and will not be wasting anyone's time by applying for financing after the purchase has gone through.
That shows you're financially stable, able to pay cash, or get approved quickly with sufficient funds so that there won't be any delays in the purchase.
2. Make the Highest Offer
Think of what your maximum price or affordable budget might be – in case it is super-competitive and you have to bid high to stay in the running.
To get noticed and maximize effectiveness, some recommend making your highest offer right from the start, while others suggest a more moderate approach. The benefit of going high is that it helps stand out from other buyers who are less aggressive and don't go venture their set budgets when bidding.
3. Write a Personal Letter
Sellers will always place more emphasis on a personal letter than they'll on an offer that's submitted electronically.
Be sure to include a brief mention of why you love the home and what makes it stand out from other alternatives on the market, including your budget range.
This personalized approach will help set you apart from others who aren't serious about making an offer.
4. Include an Appraisal Gap Guarantee
This guarantee ensures that the seller will not lose if your appraisal for their product brings in an offer that's lower than what you bid on it.
5. Keep Time Frames Short or Add a Time Limit to Your Bid
You can make a bid without any time frame attached to it. But you'll stand out more if your offer comes with a specific date by which the seller must reply and move forward on your purchase or withdraw their product from consideration.
6. Pay in Cash or Put More Money Down
If you're bidding on a house, paying in cash will give you an advantage over other bidders who can't or won't do the same. You'll also stand out when making your offer if it includes putting more money down than what's required by the seller.
7. Use an Escalation Clause
An escalation clause allows you to match any other offers that come in over a certain price point and ensures that the seller will not sell their product for less than what you are willing to pay.
8. Limit or Waive the Contingencies (Financing, Inspection)
Sellers will be more likely to agree with any offer that includes limited or waived contingencies. This allows you to move forward quickly without wasting time and money on appraisal fees, title searches, etc.
9. Offer to Pay Seller Costs
If you want to make a lowball offer, include in your bid any additional costs that the seller might incur when selling their product.
Everyone may not agree with this suggestion but will be more willing to accept an offer from someone generous enough to cover upfront and closing costs on top of whatever they're asking for already.
10. Be Flexible on the Closing Date
If you're the highest bidder on a product, sellers will be more likely to agree with your offer if it has a flexible closing date.
It would help if you also were ready to move forward immediately and not waste time because other buyers are waiting for their purchase agreements.
Include any of these tips in your next bidding war so that you'll be at an advantage over others and can walk away with the product you want.
Ready to go hunting for that perfect home? Start with us with a mortgage pre-approval.