So, you’ve already found your dream home on the market. Congratulations! The next step now is to secure your offer. But when a listing you want is a hot item with multiple offers, you may find yourself in a bidding war.
A bidding war in real estate is especially common in a seller’s market wherein demand is high and the housing supply isn’t enough to meet the demand. The seller usually has the upper hand in this kind of market as they have the option to select from multiple offers.
That said, how can you ensure a win in a bidding war over competing offers?
Offer the highest price
The most classic move of all is to offer the highest price to outbid the competition. Most homeowners look for the offer that will give them the most generous returns on their investment when selling a house. Some buyers are willing to offer up to tens of thousands of dollars more than the asking price. But before you go the same route, get a feel for the market demand first. That way, you don’t end up way past your budget. It’s important to consult your real estate agent on how much you should bid before proceeding.
Pay in cash
When a seller needs cash urgently, they are more inclined to choose a spot-cash offer over a higher offer to be paid via a mortgage. If you have the means, consider paying in cash. But if you can’t do so, you can opt for a larger down payment or you can offer a deposit.
Get a mortgage pre-approval
This is a letter obtained from your lender or bank of choice and includes a mortgage amount based on your financial capabilities. It proves that you are financially capable of paying off your mortgages and tells the seller that you’re a serious buyer. Most home sellers opt for offers from pre-approved buyers, so make sure you have one to get an edge over your competitors.
Add an escalation clause
This particular clause allows you to place an offer with set provisions. For example, if the house you want is listed at $200,000, the provision in your clause can state that you’ll go $5,000 above any offer up to a maximum of $300,000. This gives you the advantage of always having a higher offer than those of your competitors. It also allows you to limit your bid up to your price cap, thus, preventing you from going past your budget allotment.
An escalation clause is a win-win situation for both buyer and seller because the seller will want to know that they’re assured of a higher sale price than what they listed. For the buyer’s part, they don’t have to pay more than they have to as the clause still keeps them within their budget. Plus, the seller must first provide proof of the competing offer before the clause can take effect.
Be more flexible
Consider the seller’s schedule in selecting your closing date. Some might want to close the deal earlier, especially if they have plans on relocating soon. Others might choose a certain date, like during the school break, so their children could complete academic requirements at their current schools before moving.
Skip some contingencies
Contingencies are conditions that have to be met for a sale to push through. Examples are appraisals and home inspections. If you’re fairly confident that the property has been well-maintained, you might want to consider waiving the home inspection contingency. However, doing so comes with some risks.
Ideally, a home inspection should reveal both superficial and structural problems with the property. An appraisal tells you if you’re paying for the fair market value of the house you’re buying. However, if you know or trust the previous owner, as is the case if you’re buying from a friend or relative, it might be safe enough to waive these.
If you don’t want to risk waiving contingencies, you can keep the inspection time frame short, preferably, less than a week. That way, the seller won’t have to wait too long to see if you’re proceeding with the sale.
Get a reliable real estate agent
While these tips may sound fairly simple, it’s still best to enlist the services of a trusted real estate agent. Not only can they help you structure the best offer to ensure victory in a bidding war but they can also keep the entire home-buying process stress-free and mistake-proof.
In Palm Beach Gardens, the real estate agent team to trust is the Telchin Group, LLC. They’re the #1 team of real estate specialists serving clients in the most prestigious Florida neighborhoods, particularly the luxurious West Palm Beach country club community, The Club at Ibis. To start your search for houses for sale in Palm Beach Gardens FL or in Ibis, call the Telchin Group at 561.301.0249 or send them an email here.