With spring right around the corner (I know, we haven’t even seen snow yet but I can think positively right?) the real estate market should be very strong, maybe not as crazy as spring 2021 but most economists see a sellers’ market with 5% price increase over 2021. If you are a buyer in this market how do you find and secure your dream home? It won’t be easy that’s for sure. When you find a home you like the chances are good there are other potential buyers who have their eyes on the same property. You are then put into a situation where you have to compete with them to become the new owner. To ensure you’re well-prepared for this scenario, let look at some of the most effective ways to win a bidding war:
1. INCREASE YOUR OFFER
The best (and most obvious) way to win a bidding war is to outbid the competition. You may not even have to increase your offer by much but every dollar is going to count. My advice to buyers trying to figure out what to offer is if you see the sale price of this home in a few months what is your reaction going to be? Will you say “shoot, I wish we had offered more than that” or “wow, that is ridiculous I can’t believe someone paid that”. Find that number and your reaction and offer it, BUT before you decide on anything, be sure to ask your REALTOR® for guidance.
Get your preapproval letter BEFORE you find a home. If you are serious about buying talk with your lender well BEFORE you find a home. I can’t tell you how many times a buyer has said to me “oh, I am fine, it won’t be a problem getting a preapproval letter”. Lender might be slow to get back to them or they need you to provide documents that aren’t readily available. Sellers aren’t going to wait for a buyer to get their preapproval, they will just move on to the next offer. Be proactive. Call your lender when you decide you are ready to buy not when you find a home.
3. NEED FINANCING?
Can you pay cash? Most people can’t BUT you can talk with your lender about waiving the financing commitment. You put your escrow deposits in jeopardy if you can’t get your loan, but if you are confident and your lender is confident you can secure the loan, it might put you over the top. I can tell you from experience that this will go a long way in getting your offer accepted.
Although many sellers and sellers REALTORS® won’t allow letters from buyers to sellers (fair housing regulations) it can be an effective strategy. When you write about your situation and why you want to be the owner of their home, the seller may be drawn to your story and connect with you on a more personal level. They may also feel more comfortable choosing a buyer who they know will value their home as much as they did.
5. BE FLEXIBLE
Find out what the seller wants. A large majority of the time the highest price wins BUT a good offer combined with the concession of letting the seller live in the home after the closing can help you. For example, you put in your offer that the seller can rent back to you for x amount a month, or if you really want to sweeten your offer you can allow them to live in the home rent free. Find out if the seller wants to move quickly or is looking for a delayed closing. You may also want to consider waiving as many contingencies as possible, including the financing contingency or home inspection contingency. There are significant risks to doing this however, so make sure you discuss it with your REALTOR® and lender (see paragraph #3) before making any decisions. Find out what works for them and adjust your offer as best you can. The more flexible you are, the more likely the seller is to accept your offer.
Finally, prepare yourself by talking with your REALTOR® and meeting with your lender. Decide what you need in a home and what you’d like in a home. While it can be a frustrating process in this sellers’ market, keep in mind that someone is winning these bidding wars. Why not you?
If you have any questions about these real estate terms, or are looking to buy or sell a home please contact me, John McCarthy at Rowley Realty, 165 Main St., Rowley, MA 01969, Phone: 978 948-2758, Cell 978 835-2573 or via email at firstname.lastname@example.org.