It happens often in the real estate business. A buyer finds the home of his or her dreams and wants to submit an offer, only to learn that there are multiple other offers on the table. Such circumstances can be stressful, especially if you have no idea what to say or do to make your offer stand out above the rest.
By keeping several helpful tips in mind, you can hold out hope that you’ll gain a favorable outcome. Implementing these ideas cannot guarantee that you’ll win a bidding war, but it’s likely that it will give you an edge against your competitors.
Include a preapproval letter with your offer
Nothing is more frustrating for a seller than to be pleased with an offer that a buyer has made, only to have it fall apart when he or she fails to secure loan approval. If yours is one of the several offers at stake and is the only one that includes a preapproval letter, you can be sure it will catch the seller’s eye. A seller who sees a preapproval letter with your offer knows that you’re serious about making the purchase.
Sweeten the pot as much as possible
It gives you an advantage to be the high bidder. It’s never a good idea, however, to offer more than you can afford. Therefore, a good school of thought is to offer the highest bid you’re confident you can make good on. Is it possible to submit a lower bid, then negotiate your way to the top? Yes, but it’s unlikely going to work in your favor if there are multiple other offers to choose from, especially if they are higher than yours to start.
Use an escalation clause to your advantage
You might make a lower offer in a bidding war and still come out on top if you incorporate an escalation clause into your contract. This lets the seller know that if another buyer has submitted a higher bid, you’re willing to increase your offer by a certain amount, up to a certain amount.
Offers without contingencies take the lead
Most home sales nowadays include at least one, if not several contract clauses. A buyer you’re competing with might offer to purchase the home as long as repairs needed after inspection are estimated under a certain amount of cost. There are many types of contingencies that may be included in an offer.
However, if a seller has the choice to accept an offer without contingency, he or she is likely to do so. In fact, there have been times where a seller has accepted an offer that was not the highest on the table, simply because the buyers were purchasing on a non-contingent basis.
Cash offers win out almost every time
If you really want to win a bidding war, offer to buy the house with cash. This saves everyone a ton of paperwork, time and effort. Cash deals are often more attractive to sellers because the sooner they have money in their hands, the sooner they can use it how they see fit. You might even be able to negotiate a lower price by offering cash.