Bidding wars are common in a seller’s market when there are fewer properties and a lot of buyers. A bidding war is in the seller’s favor as it might allow them to sell their property fast and above the asking price. As a buyer, a few things can help you stand out from the rest of the bidders and win the bidding war.
Get Pre-Approved For A Mortgage: Getting pre-approved for a mortgage is beneficial even when there is not a bidding war. In a bidding war, a pre-approval letter might place you ahead of the bidders without this letter because the sellers will treat you as a more serious candidate. A pre-approval letter also means that you have cleared the hurdle of securing financing for your purchase, so the deal will move along quicker, which is appealing to many sellers. If there is adequate room between the amount you are approved for and the price you are bidding for, it may also push you ahead in a bidding war because the seller will be confident that you have room to raise your offer if it comes to that.
Make an All-Cash Offer: If you have the funds, making an all-cash offer may put you ahead in a bidding war (unless there are other all-cash offers). In a cash offer, things move along relatively fast, which is a plus for owners trying to sell fast. All-cash buyers also have a complete say over their purchasing decisions, unlike buyers relying on mortgages, so the chances of the deal falling through are quite low once they are in contract.
Waive Contingencies: Waiving any contingencies that might stop the deal or allow you to walk away from the deal with your deposit can also put you ahead in the bidding war. But it’s imperative to understand the risks associated with waiving these contingencies. If you can’t secure a mortgage, you may lose your deposit, too, if there is no mortgage contingency in place. Similarly, if the property you are trying to buy is appraised for less than the asking price, you may have to cover the difference.
Accommodate The Seller: If the seller wants the deal to complete as soon as possible but may not be able to move to a new place if the deal closes within two weeks, you might offer them to stay in the home after closing for an adequate period. If you are in no hurry to move out, you can lease it to them for a few months, giving them ample time to plan and execute their next move (if they haven’t yet). These incentives may help you stand out from the rest of the bidders.
Write A Home Offer Letter: Experts are split on this approach. Some question its effectiveness, while others believe that it allows you to emotionally appeal to the seller. For many people, the properties they are selling are much more than assets. They are homes with fond memories, and knowing that another family may buy and cherish this home as they did might be more appealing to them than the thought of it being turned into a generic income-producing rental property.
