Bidding wars are common in today’s market. In fact, according to real estate brokerage Redfin, nearly 75% of all offers these days are met with competition, making it harder than ever to buy a home.
Fortunately, all hope is not lost.
If you find yourself up against stiff competition, there are several ways you can improve your offer and (hopefully) win out on that dream home. Here’s how:
1. Include an escalator clause.
An escalator clause — also called an elevator clause — increases your offer automatically if someone outbids you. For example, it might increase your offer by $1,000 each time you’re outbid, up to $250,000 maximum.
It’s a great way of keeping your offer competitive without relying too much on the speed/responsiveness of your real estate agent to get you there. Your bid automatically increases without any extra work or negotiating, and it never goes past your hard-line budget.
2. Waive a contingency (or two).
Contingencies are a hassle for sellers — plain and simple. They also increase the risk of the transaction, making it more likely the deal will fall through in the end.
For these reasons, waiving a contingency or two may get you more attention from certain sellers. That might mean skipping the home inspection or waiving the financing or appraisal contingency. Make no mistake, though: These moves come with risks. If you’re considering this strategy, make sure to talk it through with your real estate agent and financial advisor first.
3. Write an offer letter.
Offer letters – sometimes called seller love letters — can be a great way to personalize your offer and make it stand out from the pack. You can tell the seller what you like about the home, your plans for it, or why it’s perfect for you and your family. Some buyers even include family photos for an extra touch.
4. Up your earnest money.
Money talks, as they say, so if you really want a seller to know you’re ready to follow through, put a big earnest deposit on the line. Your agent can help you determine the right amount, but just remember: You forfeit this money if the deal falls through, so make sure you have all your ducks in a row (i.e., a mortgage preapproval) before you cough up too much cash.
5. Act fast.
Finally, just be ready to pull the trigger quickly when you find a house you like. In a market like today’s, it’s not uncommon for sellers to get 10, 20, or even 30 offers in a one- or two-day period. You can differentiate yourself by being the first or second one to the table.
The bottom line
A bidding war isn’t the end of the world, but it is a sign that you need to up the ante a bit on your offer. Need help doing that? A mortgage preapproval can help. Get in touch with Premier Nationwide Lending to get preapproved for your loan today.
Premier Nationwide Lending is an Equal Housing Opportunity lender. Sponsored by NTFN, Inc. 6201 West Plano Parkway, Suite 100, Plano, TX 75093 | NTFN NMLS 75333.