The Commonwealth Blog

Thursday, July 5, 2018

Top 3 Bidding Strategies to Win Your Home

You may not think placing an offer for your new home will become a bidding war, but in an energetic market, you’ll be sure to go up against competitive bids on the home you want. After all, nearly a quarter of homes that closed in 2017 did so at a price higher than the asking price. In situations like these, you may be tempted to jump to the highest bid or else bow out. A high bid is certainly one way to attract the seller’s attention, but it’s not the only way. Utilizing data from Redfin, we’ve put together a list of the top three strategies you can use to try to ensure you’re the one that walks away with the keys to the property.

Submit an All-Cash Offer

All-cash offers promise a quick and definitive closing process that’s also almost completely frictionless. In part, that’s because no one must bother preparing or acquiring a loan or appraisal, which are not only time-consuming but can kill the deal altogether if the borrower is turned down. However, it’s mostly because an all-cash offer is incredibly attractive to sellers. An all-cash offer immediately speaks to the seriousness of your interest in the property, especially to motivated sellers in high-demand markets with tight inventory. This puts you in a stronger position when bargaining over the price.

Improved Chance of Success for Offers

Standard Market: 97%                   Luxury Market: 438%

 

Waive the Financing Contingency

The financing contingency included in many sales contracts makes closing on the home fully dependent on the buyer’s ability to obtain a mortgage. With the contingency in place, if the buyer doesn’t get the loan, the sale doesn’t close, and the seller must start over. Waiving this contingency guarantees the seller that you will be responsible for finding the funds to pay for the house whether you receive the loan or not. This is risky for some buyers because if they don’t go about the process in the right way, they can end up on the hook for debt they can’t pay for. However, you can reduce your risk by speaking to your mortgage lender about your options before bidding. They may be capable of providing a fully-underwritten, pre-approval letter, which ensures that you’ll get the loan if the sale moves forward. (Please note: Never assume what your lender is ready or able to do. Always contact them before waiving this contingency.)

Improved Chance of Success for Offers

Standard Market: 58%                   Luxury Market: 76%

 

Write a Personal Letter

Writing a letter may seem old-fashioned, but it’s one of the easiest ways to connect with a seller on an emotional level, especially if they’re motivated and have several offers to consider. By helping them relate to who you are, what you value, and your personal circumstances, you may also give them a reason beyond cold, hard cash to choose you. Perhaps it’s knowing that your children will adore playing in the halls and yard the way theirs did, or that its accessibility options make it easy to care for an ill or disabled family member. Maybe it’s knowing that the property will go to someone who loves and cares for it as much as they did. Whatever the point of connection is, it has a chance of resonating with them on a deep, emotional level, allowing you to win their hearts even if you weren’t the first choice for their wallet.

Improved Chance of Success for Offers

Standard Market: 52%                   Luxury Market: N/A*

 

When buying a home, it’s natural to hope you’re the only bidder or that you’ve offered the best bid. However, the more competitive the market is, the more you need to understand the tactics necessary for winning a de facto bidding war on your property of choice. The strategies we’ve outlined above will help give you the upper hand in negotiations. Be sure to discuss them with your real estate agent and leverage the best option for your unique circumstances.

 


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