Strategies for Bidding Wars
First things first, don’t let the term “bidding war” scare you off. There is no “war”, and you will still be giving an offer just like you would to buy any house. The only difference is that it take a little extra strategy going into it.
With 23.6% of homes sold in 2017 going for higher than listing price, there’s a greater chance than ever that sellers will have more than one offer to choose from. While the most (almost) guaranteed winner of any form of multiple offers is the “all cash” offer, that’s most likely not in the cards for the average buyer. Instead, focus on other key elements:
AGENTS, AGENTS, AGENTS
Because ultimately your agent will be the one representing you and your offer, choosing the right agent is the first step of the equation. Find an agent that has great relationships with the other agents in town, and will really be able to personalize your offer. Assessing their personality (confidence is necessary, temper is not!), and track record of past “winning bids”, is a great place to start.
GET TO KNOW THE SELLER
Getting to know the seller of the home you are putting a bid on is essential. Ultimately, sellers want both the “best” offer and who they connected with on an emotional level. Really paying attention to a seller’s needs and creating an offer that aligns to those needs is key. Know the family needs extra time in the house before their big out-of-state move? Make it easy on them and write details of how you would be able to give that extra time in a personalized note with your offer letter. Adding why you love the property is always a nice touch, too.
CLOSER TO CASH
While a full-cash down payment is a dream offer, getting your offer “closer to cash” is much more realistic, and doesn’t necessarily even take more money upfront. While there is always the option of a larger percentage of a down-payment or earnest money, a pre-approved loan (a fully underwritten loan is even better), gives your offer a much higher appeal. This gives the sellers the peace of mind that if the offer is accepted you are ready to go with your financials in place to move forward.
FAR FROM CONTINGENCY
Sellers don’t want the risk of going with an offer only to have the buyers back out on a contingency last minute. With that said, the fewer and the shorter the contingencies, the better. There are some contingencies that by being smart about, you can ease both your and the sellers’ worries. For instance, if there is an offer deadline date - do the inspection ahead of time so that you know exactly what you are getting into and can forgo the inspection contingency. If you still need a contingency period, think about shortening it to 3 days. Suddenly, your offer that will be finalized in 3 days instead of the typical week looks much more appealing to the sellers.
While there are pros to being the first offer if it’s above asking price, there can also be pros to being the last offer. However, the most important part is to see the property as soon as you possibly can. This allows you to strategize and make arrangements for exactly how you want to put in an offer that’s both strategic, and right for you.
Not many people realize just how high the percentage is of houses that go back on the market after being under contract. 17%, is the number. Keep this in mind when your offer for that dream house wasn’t chosen … you may have a second chance! Ask the selling agent about their backup offer policy, and be sure to keep notifications on for the house going back on the market!