The housing market remains strong despite the pandemic and high unemployment in America. And although buyers have been returning to the market in high numbers since restrictions eased, sellers are not returning in the same numbers. In fact, the real estate market is experiencing a shortage of inventory, making it more competitive for those looking to buy a home. In some markets, this may lead to bidding wars between potential buyers. So what do you do if you find yourself in this position? How do you win a bidding war in a sellers’ market?
Get preapproved for a mortgage
The very first thing you should do when shopping for a home is to get pre-approved for a mortgage. In a hot market, it is essential that you get pre-approved before you make an offer. It signals to the seller that you are a serious buyer. When there is high demand for a home and a seller receives many offers, you will not be the offer they choose if you are not pre-approved.
Make an immediate offer
If you find an off-market property or a home that has just been listed that you are very interested in, then make an offer immediately. And make an offer the seller simply can’t refuse. Work with your agent to determine what your offer should be and limit the contingencies. Sellers will be more likely to accept a full-price offer that requires little hassle. And put a time restriction on your offer – say, four to six hours. You may be able to avoid a bidding war if you can act quickly and make an excellent offer.
Offer all cash
If you have the means, then offer to pay cash for the home. If a seller receives multiple offers, then they will certainly be attracted to an all-cash offer. Cash purchases minimize the amount of hassle involved with a home purchase. Many home purchases can go south because of troubles closing on a mortgage – from issues with the lender to problems with the appraisal. Cash purchases can significantly reduce the amount of time it takes to close on a home.
Use an escalation clause
Are you really in love with home and willing to increase your offer? Then consider using an escalation clause. An escalation clause lets the seller know that you are willing to outbid the other buyers vying for the home. Your agent can help you to determine if including an escalation clause in your offer would be appropriate.
Write a personal letter
Do you feel very strongly about the home you’re trying to buy? Then it may help you to write a personal letter to the seller. Let the seller know why you love the home, and point out things you may have in common. One note – this strategy only works if you’re buying from a typical homeowner, not an investor like a house flipper.
Work with a trusted professional
Finally, one of the most important things you can do when shopping for a home is to work with a trusted professional. Having an expert agent on your side in a competitive market can mean the difference between closing on your dream home or watching as another buyer swoops in and takes the prize.