Winning a Bidding War
So you’ve found a home you like, but the problem is other people like it too, and now you’re in the dreaded bidding war. How do you win? Well in all honesty, you can’t always win these, sometimes there’s just a bigger fish. What you can always do is increase your odds. We make sure that all of our buyers put their best foot forward when it comes to submitting and offer and here’s how we do it.
How do you win the bid?
Become the strongest buyer you can be! The best odds are to be a cash buyer that can accommodate the seller’s timing and waive your home inspection (we don’t suggest this last part but technically that would make you a very strong buyer).
That’s a little unrealistic, right? Although there are people who fit that bill, 95% of buyers aren’t able to this. So what can you realistically do? Let’s break down the keys aspects of a winning offer:
Price
The best price is not always the winner, but ensuring that you can afford to bid above asking price is key. You can also sweeten the pot by saying you will cover any difference in appraisal value in cash.
Deposits & Down Payment
A bigger Purchase & Sale deposit and a larger down payment typically indicates a more serious buyer and less potential of financing issues.
Timing
The seller is almost always going to go with the buyer that can be flexible and accommodate their timing.
Contingencies
This is where the real difference is made assuming all of the bids are close in price. Who is going to be the easiest buyer to work with?
Mortgage Contingency
If you need a mortgage, this isn’t something you can avoid so you need to minimize a seller’s concerns. Offering well above asking price is an easy first step. After that make sure your mortgage pre-approval is thorough. Have your lender go through as much of the underwriting process as possible ahead of time so that you can show the seller that there is nothing to worry about money-wise.
Home Sale Contingency
Needing to sell your home before you can buy is a tough predicament when there are a lot of buyers out there who have nothing to sell, but it’s not a deal breaker. In this scenario we want to get a solid buyer under contract on your place with a contingency that you need to find suitable housing in order to close. This way we can show the sellers of your potential new home that we have minimized the risks of your home sale contingency as much as possible.
The other option is to just sell your home in advance and go into temporary housing to remove this issue all together.
Home Inspection Contingencies
We never recommend that a client waive their home inspection, especially on older homes, but some people who are competent with home maintenance feel comfortable doing so, especially in condos or newer houses. We suggest that our buyers say that they will cover X amount in home repair costs. This shows that you don’t intend to nickel and dime on the cost, you only want to know what you are getting yourself in to and reserve the right to walk away should any major issues be found.
Bonus: A Personal Touch
Stand apart from others by being yourself. Write the sellers a personal letter that gives them an idea of who you are and why you find their home so special. Including a photo helps bring it all together. Some people even go as far as to record a short video clip of themselves instead of writing a letter.
Ultimately we want to put ourselves in the seller’s shoes and think about what concerns they will have and how can we minimize them. Last year, we proudly found all of our buyers homes no matter what their circumstances were, and we’re excited to do the same for you!