Are you making competitive offers on homes only to find yourself in an endless series of bidding wars?
In a seller’s market like the one we’re seeing in the first half of 2021, the demand for homes far exceeds the available inventory. As a buyer, this scenario can be frustrating and stressful. You submit your best, most attractive offer and still lose out to another buyer offering an obscene amount of cash to outbid you.
No matter how much you want a particular home, at some point, you’ll reach the limit of what you can offer. So, if you can’t come up with more money, does that mean you’ll never win on a home?
While sellers want to earn as much money as they reasonably can, money isn’t the only factor they consider when looking at multiple offers. The truth is, sellers don’t always take the highest bid.
“Smart sellers also consider the terms as much as the price.”Esmeralda Rano, REX Agent, West Palm Beach and Miami, FL
Sometimes sellers have other considerations and priorities beyond price. For example, they may be looking for a deal with fewer contingencies or one that considers their desired time frame for moving.
5 ways to win a bidding war on a house
1. Get pre-approved from a qualified mortgage broker
Having your loan pre-approved will give you the strength and confidence in this market that you can close quickly. Be sure it is more than just a templated letter and actually underwriter reviewed and validated.
Mortgage brokers have an advantage of selecting multiple investors to ensure the most competitive terms and can usually close quicker than big banks.
Depending on your financial picture, you might even qualify for a lending solution that fronts you the cash to purchase your home and then transfers the contract back to you in the form of a loan at closing.
We recommend talking to a loan professional to explore all of the options available — there might be more than you think.
2. Think about waiving contingencies
It’s not always about price, it’s about showing the seller your confidence in closing the escrow. Improve your contingencies by shortening them to a very small window or removing them altogether.
If you feel comfortable removing either the inspection or appraisal contingencies, that will help you compete with an all-cash buyer.
3. Make your best offer first
Don’t mess around! If you love a house, are serious about buying it, and know there are other buyers interested, don’t waste time trying to negotiate.
Be upfront with the seller and give them your best offer right off the bat. This helps show the seller you are serious and are ready to get the deal done.
4. Don’t overreach
Just because you love a home, and just because you are competing against other buyers, doesn’t mean you should overextend yourself and offer more than you can afford.
Do your research before making an offer and understand that you shouldn’t go above your means.
5. Have the right team in place
“Having a cohesive team within the same company working for you can facilitate communication and help ensure your offer doesn’t get missed.”REX Agent Victor Cruz, South FL
In a competitive market, houses sell fast, so seamless communication between your agent, the seller’s agent, loan advisors, and your title and escrow company can be critical to winning a bid. When there are multiple attractive offers, you don’t want to miss out on your opportunity because the seller’s agent can’t reach your agent or your loan adviser or because information gets miscommunicated.
Having a team that works together can give you an advantage and ensure seamless communication between all parties involved. For instance, REX agent Victor Cruz recently spoke to a seller’s agent dealing with 20 offers on a single property. The agent shared that she was struggling to reach the loan advisors on many of those offers. As a result, he messaged the REX loan advisor on his team to ensure the loan advisor was looking for the call.
Competing in a bidding war can be stressful and defeating. Having the right team to help you through the process can make all the difference when it comes to competing in a high-stakes market.
“At REX,we’re a whole team of people working for you. You tell us about a home you’ve found online. We work with our field agents, so you can get in today. We do all the things you don’t have time for. We write up the contracts, we do the negotiations, we coordinate with lenders and appraisers, and so on.”REX Agent Christy Hall, Ft. Lauderdale, FL