You don’t have to be a bidding man to win a bidding war. Even though the housing market has been slow to recover, many areas are seeing bidding wars on for-sale properties. In fact, it’s not uncommon for some areas to see 10-15 offers on homes the day they go on the market. Low mortgage rates and housing prices make it a good time to buy, and low inventory creates these bidding wars. To compete in these wars, you’ll need to be financially prepared to make the investment. You should also be familiar with the neighborhood and exactly what you’re looking for.
Here are a few helpful tips for winning a bidding war in today’s market.
Have Your Lending in Place
Too many buyers start working with lenders when they begin looking at homes. If you’re going to make a bid, you need to have your lending in place. Talk to lenders in advance and have a preapproval letter in hand before making a bid. This way, you’ll be more likely to win the war because financing is already in place.
Put Cash Aside
Financing is good, but so is cash. A down payment of at least 20% is ideal, but more cash is better. You want to show the sellers that you have the funds to close on the home, and the ability to make up the difference if the appraisal comes out low.
Make a Fast Offer
You can’t wait in today’s market. When you see a home you like, set up a time to view it as soon as possible. Not only should you make a fast offer, but also personalize it. You can talk to the realtor to determine what motivations the sellers need to close the deal and use this to your advantage. The goal is to make your offer look attractive compared to all the others.
If you can, eliminate contingencies so that nothing slows down your offer. Common contingencies include financing, appraisals or home inspections. If you can’t waive these, at least find a way to shorten them. You want to make your offer strong and avoid having the sellers wait on things that may not come through. So, if you don’t need that home warranty after all, don’t ask for it.