If you find a house you love in a hot housing market, you may not be the only one with your sights set on it. Sellers will pick the offer they like the best when multiple buyers are interested in their properties, so try these tips to give you a leg up in the home bidding process when you have competition for the house of your dreams.
Put Your Financial House in Order
Make sure your financial affairs are in order before you start looking for a property to call home. Know what you can afford and be prepared to make as large of a down payment as possible.
Also check your credit reports for any inaccuracies to make sure your credit score hasn’t been negatively affected. Although this is just one factor lenders use in determining whether to approve you for a mortgage, it’s a very important one.
Improve Your Offer Terms
Increasing your offer obviously makes it more likely that you’ll win the bidding war, but it’s not the only way to make your offer more attractive. Paying in cash can make your offer appear more serious, but if that isn’t an option, you can also increase your credibility by getting pre-approved for a mortgage.
Consider including an “escalation clause” in your offer that will increase the amount you’re willing to pay if other offers are higher.
For instance, if you’re interested in a home listed at $330,000 but you’re willing to pay up to $355,000. State in your offer that your initial offer is $335,000, but it increases by $1,000 over any other offer, up to a maximum of $355,000. If the seller shows you an offer for $349,000, your offer would automatically jump to $350,000. This clause would appear in a real estate contract and basically states that you will pay (x) price for a home — but if the seller receives a higher offer — you will increase your offer to (y) price
Appeal to the Seller’s Emotions
Writing a letter to the seller to include with your offer can make your offer seem more personal. Sellers appreciate hearing how much you love their homes and may be swayed to pick your bid based on an emotional response to your letter.
Mentioning that you love a certain room because of the seller’s decorations or that you envision having birthday parties for your kids in the backyard could tip the odds in your favor over another buyer with whom the seller doesn’t feel any connection.
Keep the Process Moving
When a seller puts a home on the market, they generally want it to sell at their price as quickly as possible. Make yourself a more attractive buyer by doing everything in your power to help him accomplish that, such as offering a shorter closing time. Of course, this requires that you have your financial ducks in a row
Consider arranging an inspection before making your offer. It will cost you a few hundred dollars that you won’t get back if you don’t get the home, but the benefit is making an offer that isn’t dependent on an inspection. Sellers appreciate offers that don’t come with any strings attached, so it could give you the edge to win a bidding war if you’re in a tight housing market.