Today’s housing market is significantly different from what we had a year ago. At that time, people could offer low-ball and there was a good chance of accepting them. Now, buying a property has become more expensive and complicated, and there are reports of bidding wars across the country, even as we move into a slower sales season.
There is more to winning a bidding battle than crushing other investors with your bank account until the home seller comes up with your offer. When buying a property, it is best to do your research, set boundaries and be strategic in the home that you are going to live in or that you are acquiring as an investment. Equipped with knowledge, you are more likely to win your battle to buy property without paying more than you.
The following 11 strategies can help you differentiate your proposal and win a bidding battle.
1. Establish a relationship in advance
Establishing relationships with real estate agents and brokers can go a long way. You don’t always have to have the highest offer to win, but you do need the agent to choose the one you like the most. This often comes down to your confidence in ensuring that the agent pays off their commission quickly and quickly. If they know you and know that you are worthy, you will be far ahead of the game.
As a buyer you should choose a representative who is experienced, local and well known. The more respected the buyer agent or broker community, the more successfully they can deal with listing agents. While you are at it, the listed agents also get good favors, as they are the only ones who meet all the parties involved in the sale. In competitive situations, working with a familiar broker and meeting face-to-face with a listed agent will make the agent feel more comfortable, which will increase your chances of winning, especially if the two offers are very close.
2. Know the neighbors
Make sure your expectations are not beyond your means. Some neighborhoods are more expensive. Some people have more (or less) popular housing types and everyone has different types of nearby benefits. There are many websites with price comparisons for the features of each community. Research can help you avoid neighborhoods outside of your price range or help you find the right locations for you. Use these sites to narrow down the places you want to buy.
3. Make strong offers
It is important to stand in a bidding war. If you do not want to pay more, deposit a higher deposit so that the seller knows how serious you are. A higher deposit can show the deposit seller that you are financially stable, and thus less likely to transact.
Remember, though, that sincere money is not always refundable, especially if you do not close the property. Be intentional when submitting higher deposits and understand what you agree to.
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4. Write a personal letter
You can write a letter to go with your proposal. Adding your story to your offer can help the seller feel an emotional connection with you. Not only does this put you in a bidding war, but the seller may also be more interested in being flexible with you.
That being said, it can influence a seller not to choose you. Although it is rare, there are some things to consider when writing a letter with your proposal. Focus on what the home can do for you without forgetting what the home owner already means. It could be the home where they raised their children or where they lived for years. Too much of your letter about you may consider other offers from the seller.
4. Add an increase clause
Another way to create a strong offer is to agree from the start if you get a higher price from your buyer. You can accomplish this by writing down the contract you will offer, for example, সর্বোচ্চ 1,000 or $ 5,000 more than the maximum offer submitted.
When following this strategy, make sure you want to include a cap in total, or you can easily surpass what you want to spend. Choose the place where you will move away from the property and then stick to it. Getting caught up in a bidding battle can be fun, but don’t let the thrill cost you extra.
5. Drop contingency
You may be tempted to add immunity to your offer, especially if the real estate market moves too fast or you fear you will ignore something in the transaction. Types of contingencies include:
- Home inspection
- Home for sale
That being said, sellers prefer offers without any contingencies. Offensive events reassure the seller that nothing will stop at the last minute. This can give sellers more confidence in your offer than they have in others which includes contingencies.
6. All cash offers
Knowing speed is the key to winning a bidding battle, you need to be prepared to pay in cash if possible. No matter how big the down payment, processing and mortgage approval may be from the time of accepting the offer to the time of handing over the keys.
Coming to the table with cash takes you ahead of the competition. Sellers prefer cash offers because they are more reliable, and are less likely to fail at the last minute. Although not all buyers or investors can make all cash transactions.
7. Be pre-approved
If you cannot make all cash transactions, approve your loan in advance and pay as much cash as you need for your financial situation. Mortgage pre-approval letter offers can make the seller more confident because the first step of financing protection has already been completed.
Pre-approvals also help you know as a buyer
- How much a donor is willing to give you
- What will be the monthly mortgage payment
- There are no mortgage options available to you
An employer looks at your credit score, job history, identification, bank statement, current account and before you apply for a full mortgage to see if they can approve you. If you are previously approved, you will receive a certain loan amount that they are willing to lend you, which you can deposit with your offer.
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8. Work fast
As mentioned in Figure 6, speed is a big part of the equation to win a bidding battle. The internet has significantly increased the pace of home sales, with some homes selling on the same day they came to this seller’s market. If the property you want is available, don’t wait for an open house and don’t forget the low ball offers. Look at the property so you can evaluate yourself and make your best offer right now. You can only get one crack here, so put all your paperwork ahead of time. When the right property enters the market, you can get it.
9. Be flexible
Expressing your desire to work with the seller’s schedule and requirements can go a long way towards successful purchases. If the seller wants to stay home for a while after closing, you can offer a “lease back” or “rent back”, which means you will become their temporary landlord until they leave. If you are making a bid for a short sale, make it clear to the seller that you are willing to wait for the bank’s decision, as long as it may not take.
10. Buy as you have
Be an easy buyer to work with. If you throw a red flag that will be difficult for you throughout the process, most sellers and agents will be embarrassed, no matter the size of your offer. Instead, value your offer as it is and draw a simplified deal. Many sellers will accept a lower purchase price in exchange for less hassle-free transactions that will close in time. As an added benefit, these same agents or sellers may choose you again one day. The better your reputation, the more access you will get and the better the price.
11. Keep trying
Do not be intimidated by high bidders; If you really want the property and you think you can make it work, go ahead. Offers and bids that you feel comfortable with, and remember your “walkway number”. Bidding battles can get emotional quickly, so it’s important to determine and remember your financial limitations.
If you lose the bid, offer to backup when the accepted contract is closed. Remember that not every opportunity will go your way, and it is better to bid and lose than to bid extra and pay extra.
If someone else closes the property, start looking for someone to bid. Buying real estate in the hot seller market means submitting a few offers before closing your new property.
Bidding battles for lower-edge properties were more common, but now no property is safe. Even with all the previous information, it takes some luck to win a bidding battle. As already mentioned, use winning strategies and don’t get caught up so much that you buy a property at a price higher than your maximum value. Do your research, know your limits and be aware of the value of the local real estate market. Being armed with the right knowledge can give you an edge over the competition, allowing you to outperform them without additional bidding.