In a Bidding War? Here's What You Need to Know
Bidding wars are common in competitive housing markets. Home buyers who find themselves in a bidding war can take steps to win, or at least to give themselves an advantage over the other buyers. Getting pre-approved, writing a letter to the sellers, staying flexible with the terms of the contract and working with a qualified real estate agent can help the buyer to stand out among other buyers.
Pre-qualification is the first step in applying for a mortgage. Getting pre-qualified is easy, but it's also less meaningful than pre-approval. Taking the time to get pre-approved can help ensure that a home buyer's offer on a home will stand out among other offers. Of course, once an offer is already put down on the home, it's too late to get pre-approved for that offer. Since it's impossible to know when a bidding war is coming, the best thing that homeowners can do to stay competitive is to get pre-approved before beginning a serious home search. Homeowners hoping to get pre-approved can do so by working with their lender. Contacting a reputable lender before looking at homes can help start off the process.
Be Careful With Contingencies
There are multiple home buying contingencies that a homeowner can put in place on a home offer. The most common contingencies include:
- Home inspection. This contingency enables the home buyer to back out of the contract if a home inspection turns up problems that the seller can't or won't repair.
- Appraisal contingency. The appraisal contingency states that the buyer can cancel the contract if the home appraises for less than the offer.
- Loan contingency. This is the final contingency to be waived; it states that the buyer can cancel the contract if the loan fails to fund.
Contingencies add risk to the home sellers, who may lose the deal at various points of the home selling process. Removing contingencies can help make the offer more attractive. The contingencies are in place to protect the home buyer, so waiving the contingencies can be a risky move. Working with a real estate professional can help ensure that this is done wisely.
Write a Letter
Another way that some home buyers make their offer stand out is by writing a letter to the seller. The letter often includes personal information about the buyer, like who will live in the house, what they are hoping to get out of homeownership and what they appreciate about the property. This works because home sellers can become attached to their properties. Knowing that the house will be sold to a family that appreciates the property can help the seller feel good about the transaction.
Extend Small Courtesies
Selling a home can be stressful. Often, sellers are faced with tight moving deadlines while also searching for another place to live. Extending small courtesies like remaining flexible on the move out date can make an offer more attractive to the seller. Home buyers in Tipton County may even offer to rent back the property to the seller.
Know When to Step Down
Home buyers who find themselves in a bidding war must keep their budget in mind as they make bigger and better offers. Going over budget just to win a bidding war can cause bigger problems down the road. Knowing when to step down can prevent this from becoming a problem.
Work With A Qualified Real Estate Professional
Working with a qualified real estate professional can help home buyer to win a bidding war. For more information about bidding wars and how to make the most competitive offer, contact a reputable real estate professional in your area.