So, you’ve decided to buy a house or get a different one. In some markets, you won’t be the only one making an offer. In fact, the housing market is really tight, and prices are skyrocketing in certain cities.
REALTOR.com says that bidding wars on homes is just normal these days in some areas such as San Jose, Denver, Dallas, Austin, Boston, Seattle and Raleigh with some bidders are offering up to 20 percent more than the list price just to win the home.
“You first need to research and become so intimate with the property and its value that you practically are in a relationship with the home,” says Melanie Siben, Master Certified Negotiation Expert and real estate salesperson at Rutenberg Realty in New York City.
Once you really know the area and the house you want to buy, you will be ready to make your move, she adds.Check your home buying eligibility. Start here (Dec 9th, 2023)
15 tips to win home bidding wars
- Prepare to offer more than they are asking. Make your offer a couple thousand more above the asking price. If it’s a very competitive area the house is listed for instance at $500,000, offer something precise like $527,000 instead of $525,000. “It makes a difference,” she says. “It shows that you took your time to calculate that number.”
- While you are still rational and not emotionally connected to the property that you desire, decide your absolute best offer. “Don’t allow the charms of the homes to persuade you,” she explains. Figure out your BATNA — Best Alternative to a Negotiated Agreement. It’s your walk-away number or Plan B. Having a walk-away strategy helps to neutralize any emotions attached to the property.
- Figure out if cash is possible. The amount of people paying cash for a house is growing, especially in big cities. About 38 percent of residential homes in the nation are being bought with cash, according to RealtyTrac. That number is growing especially in big cities.
- Get your preapproval from the lender. It requires more documentation than a prequalification. But with that letter in hand, it shows the seller exactly how much you are eligible to borrow. Also, a preapproval saves about a week’s time during the closing process and makes you more competitive in the bidding process.
- Include a clause in the written offer that if the home doesn’t appraise at amount you offered, that you would be willing to foot the bill up to a certain amount.
- Be nice to the seller and agents involved .“The reality that many of us — at least 30 percent of population — make major buying and selling decisions emotionally,” Siben states. “This is where people might reach a seller emotionally. Therefore a lower offer by a loveable applicant could beat out a higher offer made not by a not so fuzzy and warm applicant.”
- Work with a broker you like and is likeable, who is popular with other brokers and is connected in the community, and who is knowledgeable and can sell you enthusiastically to the seller. Also, a well-connected agent might be able to find you a listing that’s not even on the market yet.
- Develop rapport with the owner of the home or the seller’s broker, if one exists. “Ultimately, people like to do business if they like the people they are dealing with, and they feel a connection,” Siben says.
- Think double — This means putting yourself in the other person’s shoes and plan your strategy accordingly. Will this seller care that you love the choice of colors they have painted the walls? Will the seller care that you would be an excellent neighbor? Is the seller a cat lover, and would she/he appreciate that you just rescued two small kittens from a shelter?
- Be genuine. Lying is never good. “Bad karma could make the offer go flat. I do believe in karma. Ultimately if you aren’t genuine, it will be recognized,” she says.
- Present yourself well in person and in writing. If you wear your sweats or a nice dress or suit to an open house or a showing, it could reflect upon the seller’s choice in the end if two applicants were bidding on the same house.
- Show enthusiasm about the property. Agents know if a buyer is very interested in the property, she or he is less likely to drop the ball when the process faces challenges. “And there is always a challenge,” Siben says. “Several months can pass during the process, and some people lose interest.”
- Write a poem or a letter about the property expressing your love and passion for the property. “If you are competing with so many people in a tight inventory, you have to shine. If I wanted a property, I would do anything,” she says. Whatever your talents are, share that with the homeowner such as baking cookies for them or painting a painting.
- Add an escalation clause into the offer saying you are willing to increase your bid if need be. Make sure you are dealing with ethical sellers and brokers. In many states, house offers don’t have to be show or proven
- Be willing to be flexible in any area that would benefit the seller such as move in when it is convenient for the seller or offer to take the home as is and don’t demand any fixes that came out of the inspection.
Thinking outside the box and putting in a little more effort than the normal offer can yield you a win the home bidding wars. Customizing your offer to stand out from the rest can also be a great way to say that you would be the best next owners of someone’s house.Check your home buying eligibility. Start here (Dec 9th, 2023) Check your home buying eligibility. Start here (Dec 9th, 2023)