A bidding war occurs in a real estate transaction when there are multiple offers on the table at the same time. Multiple offers can be handled in different ways but most frequently the buyers will be given the opportunity to make their best and final offer. This means there will be one chance to make the offer that will be chosen. It can be very challenging to make a strong offer but not get wrapped up in the energy that surrounds a bidding war. These tips will help you navigate this particular real estate situation.
1. Have Your Pre Qualification Ready – When you find a house you love you want to be able to make an offer. This becomes even more important if it’s the house of your dreams and there are other interested parties ready to make an offer at the same time. The time it would take you to get the pre qualification after seeing the house could prevent you from winning the bidding war. At Title Mortgage our loan officers can review your financial details and discuss your price range before you start your house search. Then when you find something you love we can send you a customized pre qualification letter for the amount you plan to offer. This can be done very quickly if we have already determined your pre qualification amount.
2. Choose a Local Lender – When a seller is considering multiple offers they will pay close attention to your loan pre approval. When you present a pre qualification from a respected local lender it is taken more seriously then a pre qualification from an online lender. It’s not that the online lender isn’t reputable but when choosing between buyers a local lender can often seem more secure to a seller presented with options.
3. Secure Your Down Payment – When there are multiple offers, an offer with a 20% cash down payment can look more appealing to sellers. If you have a down payment that’s under 20% don’t stress, stick to your financial plan and stay confident.
4. Prepare Your Paperwork – Organization is important in the real estate game. Your lender is going to need a lot of financial information from you including bank statements, W2’s and more. Having this documentation organized will help ensure the process goes smoothly long after you’ve won the bidding war.
5. Skip The Low Offer – Everyone wants to get the best deal on a house they possibly can. Making an offer can be tricky and the best way to do it is to consult with a real estate buyer agent first. Your real estate agent will have insight on a bidding war as well as experience that will give you an advantage. When you commit to participating in a bidding war on a home, you need to accept that you are probably going to pay a fair price for the house or a little more. Buyers often struggle with what to submit as their best and final offer on a home. However the best way to approach the situation is to consult your buyer agent and offer exactly what you are willing to pay for the home comfortably. Don’t get caught up and offer more then you can afford but you also don’t want to try and get a bargain. Offer what you can afford and what you think the home is worth.
6. Share Something About Yourself – Sometimes in a bidding war the offers can be very close. Close enough that the seller has to look at other factors to make their choice. Besides looking at who the lender is, how much the down payment is and what the contingencies are, you have the opportunity to give the sellers some information about yourself. Put together a letter and photo of your family to share with the seller what you love about their home and how excited you are for the opportunity to live there. When offers are very close, a simple, honest letter can be the thing that makes your offer stand out.
You may expect more bidding wars during the high traffic spring real estate market but when a great house is listed, there is always the potential for multiple offers. The more prepared you are and the more confident you are in your budget the more likely you’ll come out on top. Don’t miss out on the house of your dreams. Call Title Mortgage at 603-643-1400 today to get started with your pre qualification!