How to Win a Bidding War on a House
The U.S. housing market is booming despite the pandemic. With that said, experts predict that low inventory and high demand will lead to sellers receiving multiple offers, and these are likely to all be higher than the asking price for their home. If you are trying to buy a house this year, the idea of entering a bidding war can seem daunting. Fortunately, there are some things that you can do that are likely to improve the likelihood of your success.
Here are our top tips on how to win a bidding war on a house.
Get Your Mortgage Approved in Principle and Get it in Writing
Getting pre-approved for your mortgage can be invaluable when it comes to making an offer on your dream home. Pre-approval means that your lender has reviewed your financial situation and is prepared to lend you money to buy a home. Your mortgage in principle will also include a figure of what your lender is prepared to let you borrow. Not only does this show you what your budget is for your new home, but you can show it to sellers to show you are serious about buying their home and that you won’t have problems getting a mortgage. This could make you a more attractive buyer than someone without pre-approval.
Make the Highest Offer You Can
Unsurprisingly, money talks, and while making the highest offer isn’t a guarantee, it will still get the attention of the sellers and make them take you seriously. However, be careful not to let your heart rule your head. If you are struggling with this aspect of the process, speak to your realtor. They’ll be able to advise you what the absolute maximum you should offer and keep you within your budget.
Consider an Escalation Clause
If you want to make a higher offer on a property but you are worried you’ll end up overpaying, you could consider putting an escalation clause into your offer. This is where your real estate agent includes a clause that states that you’ll pay a certain dollar amount above any offer up to the limit of your budget. This will enable you to outbid any competing offers to a certain amount, without immediately offering too much.
Offer a Cash Deal if You Can
Cash offers nearly always trump anything else, mainly because the seller doesn’t need to be concerned with you running into issues with any part of financing the sale. Cash sales are usually faster and more straightforward, which makes your offer particularly appealing to people who are looking to sell in a hurry!
Skip the Contingencies
Contingencies are specific conditions that are attached to an offer that must be met before the sale can be completed. This could be things such as asking a seller to complete certain repairs, disclosing any previous damage to the property, or, the most popular, which is a home sale contingency. This is where you are allowed a certain amount of time to find a buyer for your current home. However, you should exercise caution when skipping contingencies to make sure that you aren’t left out of pocket.
For more tips on how to win a bidding war on a house, please speak to our friendly and knowledgeable real estate team at Alchalel and Ramos Group in San Diego, California by calling (619) 777-8505.