3 Tips To Help You Win A Bidding War
Finding the perfect home can be a real challenge. Unfortunately, your challenges might continue once you have located the perfect property.
It's not uncommon for sellers to receive multiple offers when listing a home. There are a few strategies you can use when you find yourself in a bidding war with other would-be buyers to ensure you win the right to purchase the home of your dreams.
1. Include a Pre-Approval
The last thing a seller wants is to have a real estate transaction fall through because a buyer can't obtain proper financing. It's imperative that you work with your lender to obtain pre-approval for a mortgage.
You can include this pre-approval letter with your offer so that the seller knows you have the financial wherewithal to complete the purchase if your bid is accepted.
When you are in a bidding war with other buyers who don't have pre-approval, this could tip the scales in your favor and help you win the bidding war.
2. Increase Your Earnest Money
Earnest money is a deposit that you make at the time your offer is submitted. You can use this earnest money as a tool to help you win a bidding war. Work with your agent to draft an offer that includes a higher-than-average earnest money amount.
Increasing this initial deposit will let the seller know that you are serious about completing the purchase of the home. It could be this show of good faith that prompts a seller to accept your offer instead of the others placed on the property you want to buy.
3. Include an Escalation Clause
Another tactic that you can use to help win a bidding war is an escalation clause. An escalation clause is essentially an agreement to increase your initial bid by a set amount should any other buyers match your offer.
You can specify a maximum price so that the escalation clause doesn't cause a home's price to exceed your budget.
An escalation clause lets the seller know that you are prepared and willing to match any offers that are received from other buyers. Sellers often appreciate an escalation clause because these clauses can reduce the amount of time spent on the bidding process.
A bidding war can be intimidating for inexperienced buyers. Work with your Realtor to strategize the best way to draft your offer so that you maximize your chances of winning a bidding war on the property you desire.
If you have additional questions, reach out to a local real estate agent.
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