How To Win A Home Bidding War

When buying a home, there is always some level of pressure to make the right offer and get ahead of the competition. However, the pressure on home buyers has been cranked up in the current market! Listing prices have been on the rise for over a year now, and the number of current listings is at a record low in Southwest Missouri. Buyers can barely get a showing before houses are sold right in front of their eyes. As a result, getting the keys to a new home can be a challenge for buyers unprepared for a bidding war.

Is this house THE ONE? Click here to read How to Know When You’ve Found That Just-Right Home. If the answer is yes, buckle your seat belts, and prepare for a bidding war. Odds are, someone else has their eye on the same property you do. Here are 6 tips to win the bidding war for your next home.

#1 Make the Most Appealing Offer

One of the best ways to win a bidding war is offering the most money. Duh, right? The challenge is identifying just how much money you can offer while remaining within your budget. It’s never a good idea to let the emotions of a bidding war cause you to make an offer you are not able to afford. Your banker and realtor are great resources and can help you identify the top of your price range. At the end of the day, it’s about making a wise decision, not winning a war. 

#2 Include an Escalation Clause

Having this trick up your sleeve can make or break a bidding war. If you want to make the highest offer but don’t want to overpay, you can include an escalation clause in your offer. Essentially, this statement says that you are offering to pay a certain dollar amount more than the competition. You can determine a budget limit, of course. The beauty of an escalation clause is that if you end up presenting the only offer, you aren’t promising more money than you need to. 

#3 Bring a Preapproval Letter

Most home buyers get preapproved for a mortgage before they start shopping for houses. This step ensures that they are looking at houses they can afford from the very beginning. You can set yourself apart from the competition by getting a preapproval letter stating the exact mortgage amount you qualify for based on your W2s, bank statements, credit score, etc. This letter indicates that you are serious about buying the home, financially stable, and one step further in the buying process than the competition. 

Click here for answers to some frequently asked questions about qualifying for a home loan.

#4 Write a Personal Letter to the Seller

Many sellers want to be reassured that the next owners will love the house and care for it just as much as they did. You can make a personal connection with the seller by writing them a letter, increasing your chances of winning a bidding war. In your letter, introduce yourself and your family. Include a few details about your favorite aspects of the house and the property. Explain what drew you to this town, neighborhood, home, etc. Sometimes we forget that the person on the other end of a home sale is a human being we can relate to!

#5 Eliminate Steps in the Buying Process

Speed is key in a market with limited supply and increased demand in a market like this. If you can cut out steps (and days) in the buying process, your offer is going to be more appealing. Some of these recommendations can be risky on the buyer’s part, but if you know you want a home, no matter what, here are a few ways you can win the bidding war.

• Leave out contingencies – Tell the seller you’re willing to pay at closing, no strings attached.
• Skip the inspection – If you know for a fact that the home has been well maintained with no skeletons in the closet, you could offer to skip the inspection contingency. At least, be sure to do an intense walkthrough before making an offer.
• Offer cash – Save time and skip the mortgage process altogether.

#6 Communicate Clearly and Often

Being easy to get ahold of is another simple way to get ahead of the competition in a bidding war. Give the seller all of your contact information and invite them to reach out with any questions about your offer. Reply to all emails, phone calls, and text messages promptly. You never know what could happen if the seller has to wait on you! Take initiative by having your real estate agent contact the listing agent regularly to monitor the seller’s progress, but be flexible if they need time to mull it over.

Following these steps won’t guarantee you win the bidding war, close the contract, and get the keys to the perfect home. We hope these tips help you navigate the current market and successfully purchase the home you’ve been looking for! If you have any questions, please contact us!