7 Strategies to Win a Bidding War

Many real estate markets are experiencing higher buyer demand than there is supply.

This is referred to as a Sellers’ Market. For example, in Charlotte, NC we have a 5 ½ month supply of homes currently on the market. Anything less than a 6 month supply indicates that we are in a Sellers’ Market. A good house in a Sellers’ market will likely result in the seller receiving multiple offers. So here are the 7 Best Strategies to help prevail in a bidding war:

1. Submit your highest and best offer as soon as possible. I am often asked by the buyer, “will I get a second chance or will the seller counter my offer?” In a multiple offer situation the seller will likely chose to negotiate with the best offer submitted and simply reject all of the other offers. So if you really want the home don’t play games and take a chance. Submit your best offer right up front.

2. Keep your offer clean and simple. Don’t ask for personal property. You can always ask for small things later after your offer has been accepted. If you don’t need closing costs paid by seller than don’t include this in your offer. Don’t ask for repairs up front; wait for the home inspection and then ask. Pay for the home warranty yourself; they are inexpensive (typically under $500) and not worth losing the house.

3. Have your agent call the Seller’s agent and ask what the Seller’s motivation is for selling. It might not be that price is the seller’s priority. It may be that the seller has a complicated move and is seeking a certain closing date or possession after closing. Unless you ask, you really won’t know what the seller will deem an acceptable offer.

4. If you are able, submit the offer not subject to it appraising. This is a volatile market and appraisals are not scientific. They are subject to human subjective decisions. The appraiser may or may not have a handle on the market and may make adjustments to his/her comparables that are subjective. If you remove this contingency, there is a better chance the deal won’t fall out and the seller won’t have to worry about you trying to renegotiate the purchase price later. If you are using financing be sure you can pay the difference from what the appraisal says the property’s value is and what you agreed to pay for the home. The lender will only give you a loan on the appraised amount.

5. Write a personal letter to the seller. Tell the seller why you want the home and how you will enjoy certain features. If the property is owned by a bank or corporation this won’t be affect the seller’s decision. But if you are buying this home from an avid gardener and you also have a green thumb assure the seller that you will enjoy the garden and will maintain the garden.

6. Submit complete paperwork including the contract, pre-approval letter and earnest money check. Make sure everything is filled out professionally and completely. You want the seller to have confidence in your paperwork. Be sure to include preapproval letter from a reputable lender with the property address on it, if possible. A certified check for the Earnest Money Deposit is better than a personal check. Earnest Money should be above what is standard in your area. This shows good faith and your commitment to the purchase of the property.

7. Your purchase offer amount should be higher than List Price. If the list price is $200,000, for example, offer 210,005 or as much as you think the home is worth and you would regret losing it for any amount less plus a few dollars to make your offer slightly higher. Or you can make your offer price $1,000 more than the highest offer up to $_________, a designated amount. Interest rates are low right now so this additional amount over 30 years really doesn’t amount to much. When interest rates rise you may regret you didn’t get the home you originally bid on months before. Ask yourself if you would let the home become someone else’s if they offered more than you.

Use these tips to put your best foot forward. Good luck!

Nancy Braun

Broker/Owner
Showcase Realty, LLC
www.showcaserealty.net