So you found the perfect home, and you are prepared to do anything to have it. But what happens when you are trying to buy in a seller’s market? That property has so many buyers competing for it that it seems almost impossible for you to win. At least not without overbidding each time there is a new offer on the house. And that can sometimes be counterproductive as a bidding war is hard to win without a good strategy. As a result, we have compiled a list of tips to help you in winning a bidding war when buying a home. So follow our guide, and you will have the house you want in your possession sooner than you imagined.
Know Your Budget
Going house hunting without a budget is like going to the market while forgetting your wallet. You know what you need, you fill your basket with groceries, but when you get to the cash register, you realize you can’t pay. So, when it comes to buying a home, you must first know how much you can spend. It will spare you a lot of time and effort looking at the wrong properties that you might never be able to afford. As a result, before you begin your search, take a close look at your financial situation. Also, calculate your monthly expenses and see if the cost of owning a new home can fit into your budget. Property taxes, upkeep, utilities, and the mortgage rate, will increase the amount you must take out of pocket each month.
Moreover, consider all the other costs that come with buying a home. The down payment, closing costs, lawyer, and real estate agent fees, are just some examples. Not to mention the moving costs that can be a hard blow on your budget. However, you can avoid having a surprise when it comes to the moving costs if you follow the advice of seasoned experts in the business, such as Best Long Distance Movers. They recommend you research several moving companies and request quotes before deciding which one to choose. That way, you will be able to work with the one that best fits your budget.
Get Pre-Approval
The majority of sellers will look for buyers who can demonstrate that their intentions are serious and that they are trustworthy. That is something you can establish by having a letter of pre-approval on hand. Therefore, having a good credit score should be your priority.
A high credit score can increase your buying power by raising your chances of getting a mortgage. So, if you can, get various credits, pay them on time, and don’t go over 30% credit utilization. By doing so, you will be able to apply for a better mortgage with better interest rates. And when you get pre-approved, you will be one step closer to winning your bidding war. The seller will perceive you as a buyer who is willing to take on the responsibility of a mortgage to get the house he wants.
Make a Generous Deposit
Making a deposit signals the seller that you are serious about buying. The more money you deposit, the more delighted the seller will be. As a result, another tip for winning a bidding war when buying a home is to make a generous deposit. For example, you can deposit up to 5% of the property’s price and have a competitive advantage over other buyers. That can also be an advantage if the sale goes through. The deposit money will go towards your down payment, so you only have to pay the difference. However, both parties must agree on the terms of a refund in case the sale does not go through.
Ask For a Home Inspection
When you want to buy a property, one of the first things you should do before making an offer is to request a home inspection. And if you are wondering how this will help you win a bidding war, the answer is simple. It can eliminate the homes that aren’t worth bidding for from the competition. If the home you’ve got your eyes on has serious issues, fixing them might come at a high price. Therefore, the money that you could use to bid and buy a better home will go towards making repairs.
However, sometimes just asking a seller for a home inspection can make him eliminate you from the list of potential buyers. So be careful when and how you ask for it, especially if you are on a long-distance house hunt. Having to travel to the property and schedule a home inspection can be seen as a waste of time by the seller. Instead, if doing this remotely, you can find a local, reputable real estate agent that can take care of all the aspects of the sale, including the home inspection.
Add a Personal Touch
Some sellers will appreciate your interest in them and their property. If they see how excited you are about their former home, you can increase your chances of winning the bidding war. And the easiest way to do so is to write a letter and send it along with your offer. In addition, you can make the letter more personal by adding a few details about yourself and your family. Then, you can explain to the seller why you want to buy the house and which features made you fall in love with it. Is it the lovely yard where your children can run about, the spacious dining room where you can host festive dinners with your extended family or the pool you have always desired? Mention each of them, and the buyer might remember you when the time comes to choose the future owner of his property.
Pay With Cash
If you can pay in cash for the home, your offer will quickly get to the top of the list. You will have a distinct advantage because few people can afford housing without a mortgage. Furthermore, sellers will appreciate not having to encounter buyers with financing issues. Also, it can save both parties a lot of time by skipping the underwriting process. In conclusion, the ability to make an offer in cash means power when the seller wants to sell his home fast. It’s a great and secure way of winning a bidding war when buying a home.
Hire a Professional
No one knows the market better than real estate agents. They know where to look for the best homes, how to make an offer irresistible, or how to spot a problematic seller. Also, reputable agents have the best homebuying tips and can help you avoid making mistakes that can cost you a lot of money. In other words, to ensure that winning the bidding war is a piece of cake, choose to work with a professional.
In Conclusion
We hope that these tips will help you make a competitive offer for the house of your dreams and win a bidding war when buying a home. Just ensure that you first have a budget, so the rest of the process can go smoothly. After all, knowing exactly how much you can spend will allow you and the seller to avoid wasting each other’s time.
About Gerardo Zavala, Realtor
There is a true passion for connecting people with real estate that makes me fall in love with my career over and over again. While my title says, REALTOR® I think I am much more than that. For example, I am present and actively listening to my client’s needs, on the spot when things are urgent, and by your side to say “congratulations.” Most of my clients will say that I am a connection away from support no matter the situation, day, or time. In my opinion, customer service, educating the client on progress and next steps, and overall satisfaction are my top priorities. How can I help you?
