Best Bidding War Tactics
A lack of available inventory means that there will likely be multiple offers on any home that does go on the market. Therefore, you'll need to know how to compete in a crowded market without spending more than you can afford to pay for a home. Let's look at how you can sweeten your offer to a seller without necessarily increasing the final purchase price.
Consider Waiving Contingencies
Typically, a purchase offer will be contingent on several factors such as the results of an inspection. However, if there are several offers on a home, agreeing to take the home regardless of its actual condition might be an effective way to push your offer to the top of a seller's list. It's also a good idea to get tentative approval for a mortgage before agreeing to waive a home loan contingency. Otherwise, you could expose yourself to potential legal action if you aren't able to close on the purchase promptly.
Allow for an Extended Closing Timeline
Typically, a seller wants to be out of his or her home as quickly as possible. However, there are scenarios in which a seller may need several weeks to close on the purchase of a new home. Furthermore, homeowners might want to wait until the end of the school year to move to provide greater stability for their children. By agreeing to wait until a current homeowner is ready to move before taking possession of the property, it may be easier to buy the home without offering more money.
Be Ready to Move Immediately
There may be situations in which a seller desperately needs to close on the purchase in a matter of days. For instance, that person may have just learned that he or she is starting a new job in a different city, state, or country. In this case, agreeing to take the home as quickly as possible can enhance your odds of becoming its new owner.
Increase Your Initial Deposit
Typically, you're required to make an initial deposit of 1% of the purchase price when your offer is accepted. However, you may be able to show a seller just how serious you are about buying a property by increasing it to as much as 20%.
Create a Battle Plan Before Engaging in a Bidding War
No matter how much you love a home, it's important to understand that other properties that meet your needs will eventually become available. Therefore, you must set a price point that you're not willing to exceed before you start engaging in a battle to obtain a given house. Otherwise, you risk making offers based on your emotional desire to win a competition as opposed to making offers based on what makes sense financially.