The moment you have waited for almost your entire life is here. You are finally ready to buy your dream home. Not just any home, but your dream home! You worked hard and saved your money for a downpayment. Your credit is squeaky clean. A list of “must-haves” has been made. Now it’s time to go house-hunting! The only problem is that we are in a time of low housing inventory. So what does that mean for you? It may mean a bidding war when you find your dream home, as other people may put a bid in on it too. You probably won’t win the offer unless you have done “all the things” to ensure your bid is the best one. These tips will help you prepare so you can win that offer on your dream home!
Be Prepared Before You Shop
This may go without saying, but the first thing to do before you even search for your dream home is to make sure your finances are in order. Have your pre-approval letter already in your hands. The pre-approval letter tells the seller that you are serious about buying their home. It also tells the seller that you most likely won’t have trouble getting approved for the mortgage. If you don’t have the pre-approval in place, you’ll probably get skipped over for another bid with a pre-approval in place. Some lenders provide a pre-approval “certificate” for buyers to share as proof that the funds are good.
How To Win Tips
Making the highest offer
Some realtors prepare multiple contracts with different purchase offers. This can sometimes help to stay on top of any bidding wars. Another tip is to use offers that draw attention by using odd numbers, such as $339,999 instead of $340,000.
Traditionally, the best way to win a bidding war is to offer the highest bid. It’s important to keep your budget in mind and not go over what you can afford. Money talks, but there may be other ways you can win the bid even if yours is not the highest. Your realtor can tell how much competition there is by getting in touch with the seller’s agent. Your realtor can also use local market data.
Other tips for making the best offer
- Remove conditions, such as “contingent on the results of a home inspection” from your offer. You will still need an appraisal because your lender will require it, and it’s the smart thing to do for you as the buyer. However, by dropping the contingency, you tell the seller that you’re willing and able to pay an additional amount in cash at closing if the home appraises for less than the agreed-upon purchase price.
- Introduce yourself to the seller in a letter or video, if possible. If the homeowners identify with you and think you are a good fit for the neighborhood, this could give you a leg up on the competition. The letter should include an introduction of you and your family and all of the property details that you love. If your offer is on the lower side, explain why so they don’t think you are trying to lowball them. If they feel you are the best fit for the home, they may sympathize with high childcare costs or health issues that incur many medical expenses.
- Offer to give the seller time for buyer possession. Often the seller needs to coordinate selling their home with buying another home and moving in a short amount of time. If you can offer the seller another two or three days to move out after closing without asking for compensation, this could be an unexpected benefit for the seller and earn you the bid.
- Offer an all-cash deal, if possible. Usually, a cash deal will make your offer automatically rise to the top because the seller doesn’t have to worry about you having problems with financing. Cash deals are faster for everyone involved because you don’t have to apply for a mortgage, and there is no underwriting to wait on.
How To Win With Counter Offers
Even if you win the bidding war, the seller may counter-offer. This means the seller would like to accept your offer but with specific changes. You can then choose to accept the counter offer or back out of the offer and walk away. Of course, you could also choose to counter the counter offer. You never know if the buyer will go along or pass.
How To Beat A Contingent Offer
The last chance at your dream home may be a bit tricky. If the seller accepts a contingent offer from another buyer, it usually means you’ll need to move on. But not so fast! If your heart is truly set on this property, then it may be worth a shot to try this as a last resort. You never know if it will work!
Ask your realtor to determine if the seller is still accepting offers while the sale is pending and if they included a kick-out clause in the sales contract. A kick-out clause allows the seller to continue accepting offers while the potential buyer waits for the home inspection, appraisal, or financing to close on the property.
If the seller gets a better offer, the kick-out clause allows them to notify the first potential buyer. They would encourage the potential buyer to match or exceed the competing offer or agree to waive some or all contingencies.
If there is no kick-out clause, all you can do is have your realtor keep an eye on the pending sales process. It’s always possible that the buyer will back out after the home inspection report or if their financing doesn’t come through. If the pending sale falls through, be prepared to jump on it by matching or exceeding the previous offer. Otherwise, the seller may put it back on the market.
Once you have exhausted all of these attempts to win the offer on your dream home, you should be proud of yourself for fighting for what you want. In the end, if you still didn’t win the offer, try to be patient. There is a dream home out there with your name on it! A realtor with experience matters.