How to Win a Bidding War on a House
You’ve finally found the house of your dreams. Unfortunately, your dream home isn’t yours alone: in fact, lots of other people have fallen in love with the property too. Believe it or not, this is quite common in a seller’s market – and 2021 is expected to be a seller’s market through and through.
This blog post will take you through some tips and tricks to come out on top of a bidding war on a house. Keep reading to give yourself the best possible chance of success.
What is a Bidding War?
Firstly, let’s take a look at what bidding wars are and how they happen. Bidding wars start when numerous buyers are interested in the same property: buyers must compete to get the property, and one of the main ways they do so is price. One buyer outbids another, who outbids another – and so on and so forth – pushing up the value of the property. Bidding wars are good news for sellers!
How to Win a Bidding War on a House
Up your offer
This is intuitive: bidding wars are by definition competition over price – so if you can increase your offer, you can better your chance of winning the war. And depending on the specifics of the property you’re after, you might not have to up your offer by very much to have the upper hand. If you can afford it, it might be worth taking the shot. Just be sure to consult with your lender first: you’ll need to be able to put your money where your mouth is should your offer be accepted.
Flash your pre-approval
Second to cold, hard cash, sellers like stability. Nobody wants the sale of their house to fall through. If you can prove your financial ability to purchase the property, you’re likely to be a stronger candidate in the seller’s eyes. The best way to do this is by showing the seller a pre-approval letter from your lender – one that is specific to the property in question. You want your application to be air-tight!
Write a personal letter
Sellers are people too. It’s likely that whoever is selling the home has lived there at some stage and created memories. Letting go of a property can be an emotional process, and if you can convey to the seller how much you love the place – and how you’ll create your own memories there – they might be more inclined to sell to you. You never know: the buyer you’re competing against might be after an investment property and have no plans of their own to live in it.
Waive your contingencies
Contingencies are conditions that must be met in order for the deal to close. Financial contingencies stipulate that the buyer will only follow through if they get a large enough loan from the bank, while inspection contingencies specify that the buyer will only go ahead if there aren’t any issues found during the home inspection. These create possibilities for the deal to fall through – so if you can waive them, you’ll probably be a more attractive buyer.
Just bear in mind that contingencies exist for a reason: if you waive them, you’ll be taking on a bit more risk. It is possible to back out of a deal after waiving your contingencies, but you’ll lose your earnest money. That in itself is why waiving them can be so effective: it demonstrates just how serious you are about buying the property.
There you have it: four effective techniques to help you win a bidding war on a house. You’re much better equipped now to hold your own in a bidding war, but if you want more advice – and the best rates on the market – reach out to UW Funding to see how we can help you. We’re experts in home loan lending, and we’ll get you into the property of your dreams – no sweat.