Entering a bidding war can be one of the most stressful scenarios for homebuyers. Having to compete with other buyers offering more than the asking price can be emotionally and financially draining. While not the preferred purchase method, bidding wars can provide positive results for buyers who implement key strategies that accommodate sellers’ wishes. To enhance the odds of receiving an accepted offer on a hot home, follow these three tips.
Shop Early and Often
The easiest way to get your offer approved on an attractive listing is by making contact with the listing agent as soon as possible. Start your home search online to get a feel for the local market, and the budget you’ll need for your desired neighborhood, home size, and amenities. Then, contact an agent who can help you get started with showings and a lender to begin your mortgage approval process.
By obtaining stats on market values ahead of time, you’ll avoid overpaying during a bidding war and potentially losing money from rash offers. Things move quickly, so having these numbers in mind before you start making offers determines your price cap – assuming it’s within budget.
Search for a home inspector in your area who can attend open houses with you. By understanding the potential drawbacks, you can feel confident making a fair offer while keeping potential structural fees in mind. Using the open house as inspection time eliminates the need for a separate viewing to complete an inspection, allowing you to waive the inspection contingency. Your offer will stand out to sellers aiming to sell quickly. Plus, if another buyer makes an offer outside of your budget without accounting for potential structural updates, you’ll feel self-assured in your offer.
Make the Process Painless
Sellers may want more money, but they also appreciate an easy transition, especially if selling under pressure. Assume the seller of your dream home is in dire need to unload their property so they can stop paying two mortgages and move forward with a new career in a different city. Don’t approach them until you’re an easy buyer, meaning you have at least a 20 percent down payment, you’ve gone through the process of obtaining mortgage preapproval and you boast a high, healthy credit score. If you don’t have these qualities and another buyer does, you’re the less desirable party.
Don’t forget about escrow deposits, a deposit put into an escrow account while you’re in contract and applied toward your down payment at closing. For a competitive listing, consider putting at least 3 percent of the agreed upon price in cash into an escrow account to show your dedication and financial readiness. For an extra, personalized touch, write a letter to the seller explaining why this home is important to you and your family. Creating an emotional case for yourself might set you apart from another candidate with the same credentials.
Prepare thoroughly before making offers in competitive markets and don’t underestimate the importance of understanding local market value to avoid buyer’s remorse.
Tali Wee is a Marketing Content Specialist at Zillow.com. She writes about personal finances, mortgages, and home improvements for the Zillow Blog and other Zillow partners.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.