After months of searching, you have finally found the perfect home. Your family is excited, the location is perfect and the price fits your budget. Only one obstacle stands between you and getting your dream home: other buyers. In a sellers’ market, competition to buy homes can get fierce. If other homebuyers are interested in the same home as you, you could easily find yourself locked in a bidding war with the other person.
A bidding war happens when two or more potential buyers both want to own a home. When multiple offers are received, the listing agent will contact each buyer or their agent and let them know they have multiple offers and that they may change their offer to their highest and best offer by a deadline. In this process, agents will not share the details of competing offers. Without knowing how high they should bid, some buyers will push the price higher than the property value, making it harder to stay within their original budget.
Searching for a home is already an emotional process, and competition from other buyers can only escalate those feelings. To help you on your journey to finding and securing your new home, I’ve put together four tips and tricks you can use to help you win your next bidding war.
Prepare Your Preapproval for Your Dream Home
For most homebuyers, paying for the entirety of a home upfront is not a realistic expectation. Most people will opt for a loan from the bank. One way to show the owner of your new home that you are serious is to come with preapproval for a loan.
A preapproval indicates that your bank information has been reviewed and you have been approved for the loan to buy your new home. When you are preapproved, the homeowner can rest assured knowing that they will receive the amount you’ve bid if they accept your offer. This also shows that you have gone the extra step toward settling on this home.
Factor a Bidding War into Your Budget
As I mentioned earlier, searching for a home can be emotional, and for new homebuyers, it can be easy to get caught up in the rush of bidding on your dream home.
This confluence of emotions can sometimes lead homebuyers to make reckless decisions that out scale the scope of their original budget. It is great to be excited about your new home, but it is also important to temper your expectations. Before you make that first bid, set a firm budget for your top amount. If the other bidder exceeds that budget, accept that this home might not have been the perfect fit for you.
With the right real estate agent, you will be able to find the next perfect home in no time.
Increase Your Down Payment to Outpace Potential Buyers
This option is dependent on your personal finances and will vary from person to person, but if you have the financial means to increase the amount of money you pay upfront, you will vastly increase your chances of securing your new home.
For most people, money now is worth more than money later. A higher down payment can show the previous homeowner that you are more financially reliable than your competition.
If you have the financial means, you might also consider putting down a cash offer. A cash offer will require no financing and can make the buying process go much quicker. If the previous owner of your dream home has had their home on the market for a while, a cash offer might be the push they need to accept your bid over a higher bid.
Regardless of which option fits your fiscal situation, you will likely need to show your account balances to the seller to prove you can make a cash offer on the home.
Be Communicative Throughout the Bidding War
Bidding wars are more than a numbers game. Ultimately, the previous homeowner is the one who makes the final choice of who should have the home. If increasing your down payment is not an option for you, you can show the person selling the home you are serious by responding quickly.
It is also important to be courteous in your communications with the seller. If you were selling your home to someone, would you accept an offer from someone who is curt and slow to get back to you or from someone who is quick to respond and genial?
Good communication does not come easy to everyone. For this reason, many people choose to hire a real estate agent. Real estate agents are trained to handle these high-stakes decisions and can help you consider options or deals that you might not otherwise have considered.
Final Thoughts
There are multiple strategies when it comes to winning your bidding war. Combine these tactics or use others like these tips from Business Insider.
If balancing all these tactics sounds overwhelming, I can help. If you are thinking of buying a home in Navarre, Florida, let me help make your buying experience easier. Contact me today to discuss your options. You can send me note on my contact page or give me a call at 914-447-4847.