5 Ways To Win a Bidding War on a House
The number of bidding wars has increased over the previous year, to the point where the persistent home seekers had given up on buying a home because they kept losing out in bidding wars. The early demand has been attributed by real estate professionals across the nation to a combination of low house inventories and historically cheap borrowing rates. Here are five suggestions that may help you win a bidding war if you’re one of the people competing for a home.
1. Along with your bid, include a verified approval letter.
Verified Approval Letters aid purchasers in demonstrating their sincerity as bidders. These letters are a step up from Pre-Approval Letters, which outline the maximum amount of a mortgage that a lender may approve you for. This is due to the fact that they are only offered when a mortgage business has confirmed your income and assets. With this in hand, sellers might be more inclined to accept your offer than one from a competitor whose financing might not work out.
If you haven’t already, you might think about being pre-approved for a larger loan than you require.
2. Have extra cash on hand.
Home sales that result from bidding battles frequently exceed the asking price. This may result in a home’s selling price being higher than the appraised value that your mortgage company uses to determine the loan amount. You might need cash on hand to cover the price difference. If this tactic doesn’t work, you might perhaps look for houses that are less expensive so you have room to haggle.
Speaking of money, a bid that is made in full cash may help you win the negotiation. The fact that your financing won’t be a problem may increase sellers’ confidence in your ability to close on schedule. However, if you take short cuts like missing an appraisal, survey, or house inspection that a lender would want, this choice involves dangers. By taking these precautions, you may make sure that a house isn’t overvalued or in need of pricey repairs that might lower its worth.
3. Have a fixed closing date.
Utilizing a lender who provides a closing guarantee is a third tactic. Having a lender that will assure that your loan will close on time or will pay your first month’s mortgage payment (principal and interest). After you apply and complete the first loan documentation, it is accessible on eligible contracts with closing dates as soon as 21 days afterwards. Guarantees like this can boost the trust of both buyers and sellers in a bid.
You should be aware that not all closing assurances are made equal. If your mortgage isn’t authorized by the contract closing date, some mortgage firms will just give you a flat cost.
4. Be Negotiable with contingencies.
Buyers frequently include contingencies in contracts to protect themselves, but these clauses can be a barrier for sellers. They may contain requirements for closing on a home on a specific day or that repairs be made. In a bidding war for a home, if you’re flexible with these, you might stand out from the competition. In a competitive market, for instance, sellers might be amenable to a closing date postponement. They’ll have more time to find a new home in the same competitive market thanks to your generosity.
Bringing a house inspector to the showings is one tactic some purchasers used to get rid of the home inspection contingency. These are known as “walk-and-talk inspections” because the inspectors verbally report any issues they find while doing a tour. They can spare buyers and sellers the time of having to hold off on organizing an inspection or making repairs while they wait for an offer to be accepted. This carries considerable hazards, of course. You won’t receive a formal assessment and written report, which means that you might later find costly issues that weren’t recorded.
Your real estate agent can help you weigh the advantages and disadvantages of removing any contingency because skipping them could damage you.
5. Set a deadline for your bid.
This advice might enable you to completely avoid a bidding war. Real estate agents usually advise to look for a home that has recently hit the market and giving the sellers 4 to 6 hours to accept a competitive offer. If your offer is too good to pass up, the seller can accept it before hearing from rival bidders.
Keep in mind that your local real estate market can be different. Purchasers should speak with their agents for the best advice on time constraints. With the appropriate advice, you might win the battle—and a fantastic home—while staying within your means.
If you are considering buying or selling Silicon Valley real estate, please contact Mario at: (408) 605-9999 or mario@svrealestate.com
