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Health & Fitness

How to Win a Bidding War

Competing with another bidder for a home you've fallen in love with? Read more to increase your odds of being selected!

With the 2013 real estate market heating up and homes beginning to sell, more sellers are seeing multiple offers coming in at one time. If you’ve fallen in love with a home and someone else has bid on it at the same time you have, it can be a tense wait to find out which offer the seller decides to accept. So, what can you do to increase the odds that your bid will be selected? 

Winning the bidding war is not always about offering the most money, although certainly any lowball offers will be rejected in favor of a more reasonable price. If you know there are other offers on the table, or there are likely to be, you’ll want to offer the most you possibly can without paying more than the home is worth. Now is not the time to be cheap, but you will want to be prudent. There are a few other rules of thumb to follow when putting an attractive offer on the table.

Put your money where your mouth is. In addition to offering the largest down payment you can muster, putting a large amount of earnest money on the table when you bid will show the seller that you are serious about the property. Your agent can help you determine the amount of earnest money that is likely to grab a seller’s attention.

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Demonstrate flexibility. If you can be flexible about timing for the closing or move-out date, especially if the seller has constraints of his own, your offer will come across as more attractive. Talk to your real estate agent to help learn what kinds of timing concessions you can offer that might pique the seller’s interest. Moving fast on lining up an inspection might prove attractive to one seller, whereas a different seller might appreciate extra time to close before moving in to a new home of his own.

Show you’re a good risk. By showing the seller that you have a pre-approval (and not just pre-qualification) letter from your lender, you’ll demonstrate that you have been deemed a good risk and are likely to receive the financing necessary to complete the sale. The last thing a seller wants is to have to go back to the drawing board because a prospective buyer’s financing falls through.

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Waive unnecessary contingencies. Although you will want to protect yourself with financing and inspection contingencies, there are plenty of less pressing contingencies you can probably do without. Don’t nickel and dime the seller with requests for small repairs and resist the temptation to ask that they leave any fixtures or appliances that haven’t been mentioned as part of the sale. If you don’t absolutely need the transaction to be contingent upon the sale of the house you are currently living in, don’t include the sale of your existing home in the list of contingencies. 

Don’t ask for closing costs. As part of an offer, sometimes a buyer will ask the seller to pay some of the closing costs associated with the sale. It can be a temptation to make this request, particularly if you are shelling out a large down payment. However, asking for too many “extras” is going to make your offer look less attractive than competing offers with fewer strings attached.

Consider any counteroffers. You’ll want to be prepared to consider any counteroffer that the seller makes. It’s a good idea to know your absolute limit in terms of purchase price, and this amount should reflect the true value of the home. Let your agent be a guide so that you don’t become swept away in the emotions of the moment and end up bidding far more than a property is worth.

As in any sale, your real estate agent is your best resource for navigating the tricky waters of a bidding war. By keeping your cool and making decisions up front based on your agent’s expertise, you’ll have the best chance of crafting an attractive offer that will stand out against the rest.

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