6 Tips: How To Win A Bidding War
My Recommendations for Winning a Bidding War in the Current Low-Inventory, High-Demand Real Estate Market
Tip 1: Be prepared to pay the list price or more
If you’re competing with one to 10 to 20 other people for a house, it’s likely that you're going to have to pay well over the list price and that might not be for you. You might not want to compete with other people knowing that you have to pay more than the list price, but that's probably the reality.
Tip 2: Study your local market
Study the real estate market prices and conditions with your realtor, make sure you know what type of market you're bidding in and what has been selling in the neighborhood. If you’re in a bidding war, you might figure out through other sales that the listing is under price and that it's okay to go above list price because the property is priced too low. When you know your market conditions and what homes have been selling for, you can feel confident in your offer and avoid buyer's remorse if you win the bidding war.
Tip 3: Submit a strong pre-approval letter from a reputable lender with your offer
With the advent of COVID-19, lenders have been tightening up on lending restrictions so it's really important to choose a lender that's going to get you to the closing table. When a seller has all of their offers lined up to review and they're looking at the financing different buyers have, they're going to choose the one they feel will successfully reach closing. Don’t work with a fly by night lender that doesn't have great reviews and hasn't been around for a long time.
Tip 4: Wave contingencies to make your offer more attractive
In the real estate contract, there are several contingencies that protect you as a buyer. When you're in a multiple-offer situation, it doesn't always just come down to price. You can improve your position as a buyer by eliminating the home inspection, appraisal, and/or home sale contingencies. If you feel good about the house and can waive one or more of these contingencies the seller doesn’t have to worry about these aspects of the sale if they go with your offer and that's can really set you apart from the other potential buyers.
Tip 5: Don't be picky when it comes to personal property
Let's say you're bidding on a house that doesn't have a washer and dryer or microwave. Try to look past any personal property issues, because it can come off as splitting hairs to a seller and could make your offer less attractive. You can always buy the appliances later.
Tip 6: Write a ‘love letter’ to the seller when you submit your offer
Writing a few paragraphs about you, what you love about the house, and your plans for the house should your offer be accepted can create a more personal connection with the seller. If you're bidding on a house in a multiple-offer situation where the seller has owned the house for a long time, raised their kids there, or custom-built the house they understandably have an emotional attachment to it. A letter can help the seller see your vision for the home after they’ve left, which at times can be more important to them than the selling price.
Bidding wars are becoming more common because of the low inventory and high demand. I have a lot of experience navigating multiple-offer situations for both buyers and sellers and would love the opportunity to support you. Contact me today to set up a consultation at jnewsom@bhhschicago.com or (773) 580-5840.