When a home sells for half a million over selling, you know there is something fishy going on. Some Realtors are intentionally listing homes for well under a reasonable valuation in order to attract interest from multiple buyers. In other words, bidding wars are being created because it is a good strategy to get a higher selling price.
Offers and listings should be transparent ideally. But that is clearly not always the case. So what can you do to ensure you have a good chance of winning a bidding war? The following tips will help you become more prepared to engage in a bidding war:
- Preapproval from a lender
Get the paperwork out of the way. Preapproval confirms your income and how large a loan you can get from a bank based on your credit limit. Your bid can go through faster this way.
- Escalation Clause
This contract clause will allow your offer to increase incrementally up to a certain predetermined limit if other bidders come out on top. Make sure to establish a maximum limit based on your budget.
- Flexibility on closing
Some sellers may want more time to move out, or some may be selling an empty house. Buyers that provide flexibility for the closing date may be more attractive for certain sellers.
- Larger deposit
A larger deposit will show the seller you are earnest in purchasing the home and give them more incentive to go with your bid.
- Be first to the gate
Making the first offer can be an advantage, especially if you are pre-approved and the closing date is soon.
- Good old honest truth
Tell the seller why you love the home! Appealing to the heart through a well written letter to seller might help make a difference if other offers are close.
- Don’t give up until the deal is closed
You may lose a bidding war but the deal could fall apart if the winning offer does not get approved by the mortgage provider. Diligence may help secure your spot for the next best offer.