Bidding Wars: Tips to Secure Your Dream Home

After months of searching, you've finally discovered your ideal home. You're financially prepared and ready to move forward with the purchase. However, if you're buying in a seller's market, you might face a significant challenge: competing with other buyers.

It's possible that your dream home is also the dream home of others, leading to a bidding war. Understanding what a bidding war is and learning some strategies to navigate it can help you secure your desired home without heartbreak.

What Is a Bidding War?

A bidding war occurs when multiple buyers are vying for the same property, each submitting progressively higher offers. This competition drives up the home's price, often resulting in the winning buyer paying more than the original listing price.

When Do Bidding Wars Happen?

Bidding wars are common in a seller's market, where there are more buyers than available properties. In such markets, buyers are more likely to compete fiercely for a home they love, hoping to be the one whose offer is accepted by the seller.

7 Tips to Win a Bidding War

Facing a bidding war can be discouraging, but with the right strategies, you can increase your chances of winning. Here are seven tips to consider:

1. Get Preapproved

Before you start house hunting, obtain a preapproval letter from HomeLoansByAli. Unlike prequalification, which is based on self-reported financial information, preapproval involves a thorough review of your financial documents and gives you a precise loan amount.

2. Make the Highest Offer

Offering the most money is a straightforward way to win a bidding war. However, it's crucial to stay within your budget. Consult your real estate agent to gauge the competition and use local market data to make a strategic offer.

3. Offer an All-Cash Deal

If possible, make an all-cash offer. This eliminates the risk of financing issues, making your offer more attractive to the seller. Remember, you can use delayed financing to access the cash after the sale closes.

4. Drop Contingencies

Removing contingencies from your offer can make it more appealing. For instance, dropping the appraisal contingency means you're willing to pay the agreed price even if the appraisal is lower.

5. Skip the Inspection

Waiving the inspection contingency can strengthen your offer, but it's risky. Ensure the property is in good condition by conducting a thorough walkthrough and reviewing maintenance records.

6. Stay Available

Keep yourself available for quick communication. Leave your contact information with the seller and respond promptly to any inquiries. Have your agent regularly check in with the listing agent to stay informed about the seller's decision.

7. Make a Backup Offer

If your offer isn't initially accepted, consider making a backup offer. Ask if the seller is still accepting offers and if there's a kick-out clause in the contract, which allows the seller to consider other offers under certain conditions.

Get an Edge with Verified Approval℠

In a competitive market, a Verified Approval from HomeLoansByAli can give you an advantage. This involves a thorough review of your financial documents, resulting in a more accurate and reliable approval letter, making your offer more appealing to sellers.

Conclusion

Winning a bidding war involves several factors, including getting preapproved, making the highest offer, and potentially waiving contingencies. By demonstrating that you are a serious buyer, you can increase your chances of securing your dream home.