A home bidding war can be stressful for home buyers, and getting caught up in the excitement can lead to mistakes. Anyone who is trying to buy a home in a competitive neighborhood should have a game plan for navigating a bidding war. This way, if they find themselves caught up in one, they'll be able to control their spending and hopefully make an offer that will be accepted.
Make the First Offer
One of the easiest ways to win a bidding war is to make a good offer as soon as the home enters the market. Being the first to make an offer on a home usually involves seeing the home first. Home buyers can stay ahead of the game by checking new listings on a daily basis, maintaining close contact with their real estate agent and planning to go out seeing homes on a nightly basis.
Home buyers will face a choice when they first enter the home buying market: should they get pre-approved or pre-qualified? Anyone who hopes to be more competitive in a bidding war should get pre-approved. Pre-approval indicates to sellers that a buyer is more serious about their home search and possibly more likely to be qualified for a mortgage when the time comes to buy. Sellers often look on pre-approved buyers much more favorably than pre-qualified buyers.
The midst of a bidding war is not the time for a buyer to dig in and make demands. Home buyers who are flexible with home sellers, for example by maintaining a flexible move-in date, may be able to get an edge over other buyers during a bidding war.
There are three common contingencies that many buyers will include in their home purchase offer:
- Appraisal contingency. This allows home buyers to cancel the deal if the home doesn't appraise for the amount in the purchase offer.
- Home inspection contingency. This contingency enables the buyer to cancel the deal if the home has serious maintenance problems and the seller won't make repairs or renegotiate the purchase price.
- Financing contingency. The financing contingency allows the buyer to back out of the purchase if their mortgage doesn't fund.
Waiving any one of these contingencies during a bidding war can push a buyer up over the other buyers. However, waiving contingencies can lead some buyers into trouble. It's important for the buyer to have full understanding of what they're doing when they waive the contingencies.
Establishing limits helps the home buyer know when to walk away. Home buyers who know how much they can afford to spend may find it easier to walk away when a bidding war heats up. It's important to establish limits before getting into a bidding war, since it can be hard to make these decisions once the pressure is on to purchase a specific property. Lynx Ridge home buyers who aren't sure what their limits should be should work with their lender to determine approximately how much they'll pay each month for mortgages within their price range. This will help them decide how much is too much.
For more information about what to do during a bidding war, contact your real estate professional. Your real estate agent can help you decide which strategies to use to win a bidding war.