Ever been in the situation where you finally find your dream house just for someone else to place a higher bid and get it? In the market of selling when supply is lower than demand, purchasers frequently have to make sure that their proposal stands out. When there’s more than one buyer competing for a piece of real estate, they can wind up in a pretty critical bidding battle. All sides are rivaling one another as to who places the best proposal, with both constantly upping their game to beat out the other. Luckily though, there are certain steps you can take to make your changes higher-- though none of these are scientifically backed up. We’ve collected a list of 8.
Raise your proposal.
You’ve probably already figured this one out but your highest chance will come from placing the highest bid. The amount of money you propose will normally be your biggest indicator as to whether or not you’ll win, as long as it’s higher than your competitors. Based on the cost, location, and amount of demand, an increased proposal doesn’t necessarily indicate adding $10,000 or more. In certain cases, just a couple thousand can be the extra you need to win your desired property.
Remember though that when rising your proposal, just because you're financially able doesn’t indicate that the bank is as well. You're unable to receive a loan for your mortgage of anything over the house’s appraised value. This means that if your elevated proposal wins, any additional money will have to come directly from you.
Show your pre-approval.
People who put their homes on the market want a solid buyer who can visualize a contract down to the final point. If you want to display your seriousness, it can aid your chances by obtaining a pre-approval form from your lender that shows with clarity, your ability to borrow the full amount of money needed to buy the home. Be certain that the form you display is specifically for the house you’re asking for. So have a letter written for you by your lender. In a bidding battle between just you and one other person, an easy way to win is just by showing your pre-approval since the homeowner will be more compelled to follow through with a secure process.
Raise the value of your down payment.
When competing, it can prove to be extremely useful to elevate your initial payment commitment. An elevated down indicates that a smaller amount of money will have to be lent from the bank, perfect if the bidding battle is raising the cost to limit above it’s appraised value.
To add to your spoken commitment, provide further evidence in the form of financial proof. Displaying records such as tax files, pay stubs, and your 401(k) balance presents both your preparedness and your financial ability to raise your initial payment.
Relinquish your contingencies.
These are specific conditions that need to be met as to finalize a deal on real estate. If they are not met, the purchaser is able to discontinue the transaction without any financial losses. If you waive these conditions, such as your financial or inspection contingency, you’ll display how far you’re willing to go to in order to proceed with the transaction. It isn’t impossible to recant post waiving these conditions, but you’ll forfeit what you paid.
Waiving contingencies does come with a danger, as you probably expected. These conditions allow you the breathing space you require as a buyer to bargain terms and cost after they’re set. This means if you ignore the inspection contingency and discover after examination that the property has crucial foundational problems, you have the choice of either sacrificing what you paid or be in charge of taking care of costly repairs once ownership has been transferred to you. That being said though, waiving a contingency or a few could just be that additional shove you would need to win the house when competing. Just calculate that the risk is worth it.
Cover expenses in cash.
While this is understandably something that not everyone will be able to do if you have the means in cash to take care of the purchase cost, propose to pay the entirety of it up front rather than receiving financing. This gets rid of the necessity for the involvement of an additional party and displays to the seller your seriousness. There's a slight danger whenever a lender is needed, meaning that uncertainty is exterminated when you get rid of their presence. Once again though, only a small amount of typical buyers will be able to purchase a house in this way so if you’re unable to, then pass through this tip.
Add an escalation clause.
An escalation clause can serve as a wonderful benefit during a bidding battle. To simplify, this clause is a way of telling the seller that you will increase your bid a certain amount of money if someone else equals or is higher than your bid.
Some argue that this clause puts the buyer at a disadvantage as you inform the seller just how much you want the property. That said though if your ultimate goal is placing the winning bid, then there’s nothing against placing it all out in the open to show your dedication. Decide a suitable escalation clause with a realtor that will go well with your technique and money you’re able to spend.
Have your inspector readily available.
For both sides, an inspection of the house must be taken care of before a transaction can proceed, and this carries a lot of weight. If you wish to beat out a competitor, then offer to have inspection taken care of at the beginning of the process. This allows the seller not to be concerned that by following through with a proposal and removing their home from the market, they’re killing valuable time. Having this done and waiving your inspection contingency at the same time can also be smart if you’re positive you’ll still desire the house regardless of any shortfalls, or you could arrange a shortened time contingency plan. This would all be done with the end goal of speeding up the procedure and giving both parties an advantage.
Make things personal.
Even though finances will almost always carry the most weight when deciding, it won’t damage your chances to add a personal effect with the proposal. The seller is human after all, and if you truly want a piece of property, writing a letter may help your chances. Honestly reveal the reason for your desire of the home and why you feel that you’re the best person for it--and don’t shy away from appealing to their emotions. Of course, this technique won’t prove effective on all sellers, but for one who already has a deep bond with the property, this could have a useful effect.
Securing the bag on a bidding battle may require some calculated technique and a little dosage of luck. Your hired realtor can walk through every individual step of the procedure to ensure that you’re making the correct choices at the correct moments. Come in with confidence, calmness, and trust, that if the property is destined to be yours, it will be.
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