Bidding Wars – How to Beat the Competition
Bidding Wars – How to Beat the Competition
In a hot market or when an especially desirable home is for sale, bidding wars often crop up. It’s not always the buyer with the largest offer who wins. While the seller wants the best price, other factors – such as when you can make the move – may influence the decision. Find out when the seller wants to move and see if your schedule can accommodate that. It gives you the edge over the bidder who needs a place right away, for example, and the seller wants time to find their next abode. The fewer contingencies you have, the better your odds.
Research Comps
No matter how much you want a house, you don’t want to pay more for it than you can afford and what it is worth. Unless you’re paying cash, your lender will put the brakes on giving you more money than the house’s value. Research the comps in the area, so you know the highest reasonable offer a seller might receive.
Make Sure Your Financing and Deposit Are in Order
You must receive preapproval from your lender. When you have that documentation, show it to the seller so they know your financing is in order and the deal won’t fall through due to lending issues. Of course, your lender must agree that the house is worth the asking price.
Put as much of a deposit down as you can. That shows the seller you’re serious. If you are lucky enough to pay cash for a home, do it. A cash offer is generally a trump card.
Escalation Clauses
Include an escalation clause, also known as a sharp bid, with your offer. The clause allows you to automatically up your bid to a certain limit. For example, the clause might read that you are willing to pay $5,000 more than the highest offer a seller receives, up to X amount. If the seller receives a $500,000 offer from a buyer, you’re willing to pay $505,000. However, the clause would limit the total price amount to $515,000, so you’re out of the deal if a buyer is willing to pay more than that.
A Note to the Seller
If you really love the home, send a handwritten note – not an email – to the seller. Tell them in a heartfelt way just why you love the house, without offering any criticism of the property. Do you think the seller has exquisite taste and you wouldn’t change a thing? Does the property have beautiful gardens and you would ensure these plants and flowers receive the best of care? Is it an ideal family home you can visualize your kids enjoying a wonderful childhood within? All these things could sway the seller in your direction. One caveat: Don’t include any photos of yourself and your family in the card or letter. That could inadvertently violate federal fair housing laws.
Contact Us
If you’re looking to buy or sell a home or find a rental property, you need a knowledgeable, experienced realtor. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com.
