5 Tips for Winning a Home in a Multiple Offer Situation
The dream for any homeowner trying to sell property is that there will be multiple bids and that at least two of the parties will engage in a bidding war, driving up the price so that the seller can get better than market value. Unfortunately, this is not the ideal situation for buyers attempting to purchase a house they have their heart set on. While you might have a pretty firm price in mind going into the prospect, chances are good you’ll put up a little more in order to get the house of your dreams. After all, you’re probably envisioning your life there, long and happy, with a family, and so on and so forth. That’s worth over-extending yourself a little, right? In truth, it is just this type of mentality that created the housing market crisis of the last several years, as people tried to live beyond their means and banks obliged by giving them mortgage loans they couldn’t really afford. But if you have the money, there’s no reason you shouldn’t pony up the dough for THE house. The trick is to employ strategies that will help you win the bid without spending more than you have to (or more than the property is worth). Here are a few tips to help you manage a multiple offer situation and come out with the winning bid.
- Get pre-approved. With competition high for homes that are still moderately priced for the moment, despite a housing market that’s on the upswing, you need to come to the table prepared to deal. This means you’ll need to start by making sure your credit history is clean and your score is in the top tier so that you can get the best loan possible. And when you start looking at homes, make sure all of your ducks are in a row. Come prepared to offer at least 20% down (or more if you can afford it) and provide proof of eligibility by bringing along the paperwork showing that you’ve been pre-approved for a loan. You don’t necessarily have to say how much you’ve been pre-approved for; you just need to show that you’re a serious contender.
- Look at homes with some wiggle room. If you’re going to get into a bidding war you want to make sure you have some extra funds at your disposal beyond your original bid. This means looking at homes that are in a slightly lower price range than the mortgage loan amount you’ve been pre-approved to receive. Most people look in the top of their range, and if you have some room to negotiate, you should be able to beat them out.
- Don’t low-ball. If a house has been sitting on the market for a hundred days with no other bids to speak of, you can offer less than the asking price, especially if they owners have priced it well above market value. But when you’re in a bidding war, low-balling is a good way to get kicked out of the competition early.
- Consider dropping contingencies. It’s pretty normal for buyers to agree to a higher sticker price if sellers are willing to make allowances. You might ask for the price of paint and carpeting (say, a few thousand dollars) to be forgiven. Or you might ask the seller to cover closing costs. You may want the current owners to fix a faulty roof before the sale goes through, or at least reduce the asking price for the property by an estimated amount to cover such repairs. These are pretty standard contingencies in any home sale. But if you’re trying to get the edge on the competition, you might offer to forego such allowances rather than putting in a higher bid. This will make the process quick and painless for everyone involved.
- Consider coming in with a cash offer. If you’re willing to pony up actual cash, as in a briefcase full of it, in order to beat out the competition, you might just convince a seller to overlook other bids. Even with multiple home offers on the table, it’s hard to say no to cash, and it proves that you’re ready to make the deal happen right now, unlike other potential buyers, whose bids might fall through. Your agent with Century 21 or Roche Realty can help you decide if this is the best option for you, but keep in mind that money talks, and a briefcase full of Benjamins can speak much louder than an offer on paper.
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