How to Win a Bidding War Using 8 Key Tactics
The real estate market in Collin and Denton Counties are on fire! If the home happens to have a pool, get ready for an atomic explosion. This home will be on the market an average of five days before it goes under a contract to purchase. The home will not make it active on the market two weekends unless there is something unusual about the home that only a specific buyer would only appreciate.
In a buyer’s market, you must be prepared to make a bid, often lower than the maximum amount you will be willing to spend. Sometimes, the first bid is accepted, but if another eager buyer puts a bid on the home, you must be prepared to enter a bidding war.
In the current seller’s market, you must prepare to make a move the moment you find the home of your dreams. Not tomorrow or in a few days…. that moment. Come up with a game plan that will allow you to be the victor over your inevitable fellow bidder. In today’s market, the bidding war is a game of strategic battle plans.
Winning that home might be difficult, but these tactics can help:
1.The Obvious Tactic | Increase Your Bid
Sellers want to maximize their profits, and one of the keys to win a bidding war is to offer the highest price. Finding a knowledgeable real estate agent is an absolute must. You need to know what the home is worth. If you find that the house is worth 20% more than the list price, you may want to put in a bid that is 5% or 10% higher than asking price.
Increasing your bid, especially above asking price, will get the attention of the seller.
But it’s up to you and your agent to determine what a “fair price” will be.
2.Don’t Sweat the Small Stuff | Let Go of Your Contingencies
Sellers want to do as little as possible to sell their homes. Although in a typical market, it’s not uncommon for the buyer to request a fresh coat of paint or to have certain items fixed in the home before purchase. In order to win the battle, let go of these small things.
3. Lay Your Cards on the Table | Show Your Pre-Approval
Pre-approval is a major factor of winning the bidding war. Seller’s worry that buyers who do not have pre-approval letter from a reputable lender are a higher risk of the contract falling through.
4. Pour Your Heart Out | Write a Letter
Sellers usually have an ideal buyer in mind. Write them a heartfelt letter. Show them that you are someone that will love and take care of the place that holds many treasured memories to their family. Describe how you would make their house your home. The more the seller can relate to you and sees that you would be a good fit for the home, the more likely they are to select your offer.
5. This Might Be Out of the Question (I Would Know) | Pay Cash
Paying cash is preferred. Sellers will not have to be worried about whether the buyer will be able to receive the financing needed to allow the sale goes through.
I like to sell things on the Facebook Marketplace, it always cracks me up when people say $10 CASH. I always want to say. “Well I’m so glad you have cash because I just don’t have room in my home for any more livestock.
Cash cuts the home buying process down by a few weeks but offering “cash” in your LOW offer will not get you anywhere.
6. Show them the Money | Increase Your Deposit
Want to show the seller that you are serious about buying the home? Increase the earnest money from the typical $100-200 amount to $500+. You will recoup that money at closing, and it shows sellers that you are serious about buying their home.
7. Be Competitive but Not too Competitive | Ask for an Escalation Clause
When placing your bid, you will want to ask for an escalation clause. This type of provision will allow you to bid if another potential buyer outbids you.
The trick with this type of clause is not to get carried away and to put a ceiling on how high you are willing to go.
Some buyers get extremely competitive during a bidding war and will offer more than the home is worth. Do not let emotions get in the way of making a smart bid on the home you want to buy.
8. Share the Pain | Offer to Pay for Some of the Seller’s Expenses
Maybe offer to pay for the Title Policy, a portion of their Closing Costs or part of the realtor’s fee. Realtors work for their Buyers for free. Mr. and Mrs. Seller are responsible for paying for the services that we perform for all the parties involved in the sale.
Team DiGi would love to help you win your next home. We have experience in the fast pace market.