What Happens During a Bidding War… and How to Win

In today’s hot housing market, bidding wars are to be expected. If you are trying to buy a house and find yourself in a bidding war, it’s vital to understand the process as well as winning strategies. Here’s what you need to know.

Other Bids May Come in Higher

Many homes are getting a dozen or more bids within hours of being on the market. If your bid is lower than the others, it could mean saying goodbye to the home of your dreams.

How to win: Add an escalation clause, which is an addendum to your bid saying you will go higher if other, higher bids are placed. That way you have more than one chance of ending up on top.

Financing Matters

Sellers are more likely to accept an offer that has solid financing behind it. Potential issues with securing a mortgage are a sure-fire turnoff.

How to win: The ideal scenario is to pay for your home in cash, but that’s not a viable option for many of us. Getting pre-approved for a mortgage loan can show the seller you are ready and able to purchase the home, giving you a leg up in a bidding war.

Contingencies Can Lose Deals

You can get away with contingencies during a buyer’s market, but not in this red-hot seller’s market. Asking a seller to wait until you sell your current home, for example, can push them to accept someone else’s bid.

How to win: Reduce or eliminate the contingencies you require during the negotiation process. Make it as easy as possible for the seller to say yes to you.

Inspection Conundrum

Yes, a home inspection protects you as the buyer from ending up with costly repairs that could have been uncovered. But inspections can derail a deal at the last minute, which can be worrisome to the seller.

How to win: If you’re brave enough, you can forgo the inspection altogether. However, this can be a risky decision. You can also offer half your earnest money to the seller if the inspection causes you to not buy the house. This option offers a bit of protection to both sides.

Standing Out Matters

Your bid is going to languish in the bowl with all the other bids. Similar prices and contingencies along with securely backed finances make it hard to end up as the winner in a bidding war.

How to win: Add some personality to your offer. Include a written letter about your family, so the seller can see how well you’ll care for and enjoy the house.

Bidding on a home can feel like quite the battle in today’s market, but you can end up with a closed deal. Be smart, steady, and know what you want during a bidding war. Don’t give up, and you will end up in the home of your dreams.