You could be in a real estate bidding war very soon if you are one of the many First time buyer looking to buy in highly competitive markets like Austin, TX or Denver, CO. You may also think that the only way to win the house is by making the highest offer. While this sounds like the right and possibly only strategy, you might be surprised if a homeowner picks a lower bid.
Winning a real estate bidding war doesn’t always come down to price – there are actually many other tactics that are extremely effective. All-cash offers, pre-approval letters, and flexible schedules are strategies that can outperform the highest offer. When planning your bid strategy, consider the following tactics to differentiate your offering from the competition.
1. Get pre-approved for a mortgage
One of the first steps you should take when purchasing a home is getting a pre-approval letter. A pre-approval letter states that a lender is willing to lend money up to a certain amount. These are typically acquired from a mortgage Bank or a bank.
Pre-approval is almost always beneficial, though buy a housebut especially when another buyer makes a large offer during a real estate bidding war that has not been pre-approved. With this letter, you can show the seller that you are a qualified and serious buyer, even if you do not have the highest bid. Pre-approval letters typically expire between 30 and 60 days. However, they can be updated by re-checking your information.
2. Make a cash offer
We’ve all heard the phrase “cash is king” and when it comes to real estate bidding wars, it’s no different. Having cash on hand means mortgage lenders don’t have to interfere, escrow closes faster, and you don’t have to worry about reviews. All cash deals show the seller that you mean business and are ready to buy the home today.
3. Provide a flexible timeline
The flexibility in certain details in real estate transactions is almost as good as the highest bid. Sometimes salespeople may need more or less home time than the typical 30-day shutdown period. If you’re not in a rush, move around flexibly with your closing schedule and let the seller decide when it works best for them. This can go a long way in a property war, especially when competing bids come in with tough deadlines.
4. Eliminate contingencies during a real estate bidding war
Of course, there will always be contingencies when buying a house. Home inspections, financing, and valuations are all important. However, you want to make sure that you don’t overwhelm the seller by asking too much. If you want to be the winner in a bidding war without the highest offer, remove as many contingencies as possible. However, it is important to note that in eliminating contingent liabilities, you are effectively taking the risk for the home seller (which is why it is a winning strategy) and instead putting it on yourself.
5. Write a personal letter about why you are the perfect homeowner
Almost all sellers want to make sure their home goes to people who care and love it as much as they do. Including a personal one Offer letterAdding in recent renovations, showing off why you are the perfect caretaker and sharing what you love about your home can help you stand out from the crowd. It won’t always make a huge difference, but that personal touch can help complement an offering, even if it’s not the highest bid.
Real estate bidding wars can be extremely competitive, but implementing these five strategies can make your offering stand out. You should also contact your real estate agent as they may have additional information on how to make your listing more attractive. In the end, the sellers will choose the offer that is most attractive to them. So do everything possible to make your offering the best on the table.