When there are less home sellers and high demand for housing, bidding wars become the norm in many areas. For buyers, this can be a stressful issue that comes with its own set of dangers, especially if you end up paying way too much for a home.
If you arm yourself with the right information, however, there’s a good chance that you could win a bidding war and go on to own to the home of your dreams without breaking the bank.
Here now are some tips on how to win a bidding war:
How to win a bidding war #1
Research the area
Understanding the area by researching the neighbours, schools, parks, demographics and the crime rate can give you an advantage regarding knowing the value of the location and can also be used as a great conversation starter with the seller.
Sometimes you may not like what you discover about the area, at which point, you would not bother with a bidding war. Assuming that you are happy with what you uncover, this is great information that will assist you in making a sound offer.
How to win a bidding war #2
Talk to your mortgage broker
Find out well in advance how much you can really afford to spend on a home; the last thing you want to do is win a bidding war and then discover that you won’t be able to make ends meet in the long term. Get your maximum amount, but don’t give away your cards to the seller off the bat.
How to win a bidding war #3
Do your pricing homework
Too often, home sellers deliberately list their homes anywhere up to 25% under market value with the intent of creating a bidding war. It is up to you to do your homework and find out what the real market value of the properties are in the area.
Remember that what a home sells for is not always what it’s actually worth.
How to win a bidding war #4
Get a home inspection beforehand
Oftentimes, homebuyers make an offer to purchase with conditions like having to sell their own home first or pending home inspection. If you want to to win a bidding war, have a home inspection done before you make your offer. This way you have one less condition and the home seller may give you preferential treatment.
How to win a bidding war #5
Avoid the fax/phone process
Even in this day and age of plugging in every minute of every day, there is something to be said about doing things in person. Avoid bargaining electronically and choose instead to be present when it comes to the negotiation process.
How to win a bidding war #6
Make a good faith deposit
Another way to win a bidding war is to make a good faith deposit of about 5% of the price to show that you are a serious buyer with the liquid to make the deal happen quickly. Use a bank draft and let their real estate lawyer hold onto it until the deal goes through.
How to win a bidding war #7
Place your bid late in the day
If you place your bid too early in the day, you give the seller time to generate other offers by using your bid as leverage. If you place your bid late in the day, however, that may not be the case and the seller will have a shorter window in which to generate other offers.
How to win a bidding war #8
Even if they are selling their home, oftentimes home sellers care about who is about to take over their property and want to feel assured that they are handing it over to someone who will take good care of it. Explain to the seller how you plan on doing just that.
How to win a bidding war #9
Show some flexibility
Being a hard-hitter when it comes to making an offer is one thing, showing that you are empathetic and willing to be flexible regarding the home seller’s needs is another and will bode well for you. From closing the deal early and letting the seller stay in the home until they can arrange for their move to offering them an incentive to leave quickly, there is much to be said about a homebuyer who is willing to compromise.
How to win a bidding war #10
Make your bid
Sometimes sellers tell buyers that they won’t be accepting offers for a few days and designate a time at which you can submit your offer. Submit yours early on anyways; the seller will want to know what you’re offering and this may, in turn, be advantageous for you.
Win a bidding war every time
By knowing your stuff and walking into a home with full confidence, chances are high that you will be able to get the home you want and win the bidding war!
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