Buying a home is usually the most significant financial purchase a person will make in their lifetime. For this reason, purchasing a home is both an exciting and stressful time. This is especially true if you’re involved in a bidding war.
Bidding wars are actually quite common during a seller’s market, which is why it’s important that you are prepared for such a situation.
Navigating a real estate bidding war can be tough whether you’re an experienced buyer or a first-time buyer. The good news is that there are some tried and true methods for increasing your odds of winning a real estate bidding war.
If you want to start bidding on a house the right way, follow these steps to make sure that your house bidding strategy is an effective one.
Hire an Experienced Team of Professionals
The home buying process has many steps that can quickly become confusing and stressful without the support of experienced professionals. It’s important to hire a team of industry experts who you can trust to act in your best interest and who will dedicate themselves to helping you achieve your real estate goals.
Before you make an offer on a home, consider equipping yourself with a team of experienced, local professionals who can help you in the home buying process. This includes a real estate agent, mortgage broker, real estate lawyer, home inspector and potentially others.
The good news is when you find yourself a seasoned, local REALTOR®, they work with these other parties on a daily basis. They have the trusted connections you need to sail smoothly through the home buying process.
Get Preapproved for a Mortgage Before Bidding
Before you start looking for homes, it’s important to have a healthy understanding of your financial position. Mortgage pre-approvals can help you analyze your budget and determine how much money you’re willing to spend on a home, as well as the maximum mortgage amount that you can afford.
By getting preapproved for a mortgage you are showing the sellers that you are serious about buying their home and are actually qualified to do so. This helps instill buyer confidence with a seller and can give you an edge over other buyers. Additionally, having a pre-approval can speed up the final process of mortgage approval when an offer is accepted.
Adjust Your Offer to the Seller’s Preferences
When you find yourself in a bidding war for a property, it’s important that you remain as flexible as possible when placing an offer. In this case, we don’t necessarily mean just on the offer price. Many times sellers will have preferences when it comes to certain conditions of the sale including the closing date.
This could go one of two ways, either the seller wants out as quickly as possible for a fast closing date or they want to extend the closing date and keep possession for longer than an average transaction. If you remain flexible, it could give you an advantage over other buyers who aren’t able to accommodate these kinds of requests.
In your offer, communicate that you’re flexible to meet the seller’s terms. These terms may include preferences about contingencies, which can be found below.
In a seller’s market, a seller will often receive multiple offers for consideration. While a seller’s main objective is often to get the most money for their home, there are other factors to consider such as the simplicity of an offer and the likelihood of it falling through. By including too many contingencies and clauses in your offer, you can put yourself at a disadvantage.
By eliminating/minimizing your contingencies you can make your offer as simple as possible for the seller. While one of the most successful house-bidding strategies is to remove all contingencies from your offer, it is almost never recommended. It’s important to talk to your local real estate agent, they can guide you through the process and inform you of which clauses are needed for your protection and which ones can be spared.
Get Personal with the Sellers
There are several ways you can personalize your bid to get the attention of a seller. One way is to create a letter to convince them why they should sell you their home to you.
Sellers more often than not have an emotional attachment and connection with their home, which can make it difficult to sell to a stranger. A personal letter to the seller can help establish a personal relationship with the seller and make them feel more comfortable handing over the keys.
In your letter consider including your appreciation for their home and the hard work that has gone into it. Mention personal features that made you fall in love with their home, consider mentioning how this home would benefit you and your family in the future and what you look forward to if they accept your offer.
While this is one of the oldest real estate tricks in the book, creating an offer letter is still highly effective today.
Offer to Cover the Seller’s Closing Costs
When buying a home, there are many closing costs that you need to remember to factor into your budget. However, in Ontario, the real estate agent commission is the responsibility of the seller.
To gain an advantage over your competition, you could offer to pay the commission for your buying agent. Or, if you are able to you can ever offer to cover the entire commission or closing costs for the seller.
With this strategy, you may be able to go in at a lower overall offer. The seller benefits as they won’t have as many out-of-pocket expenses when accepting your bid.
Don’t Let Emotions Get In The Way Of Reason
By following a combination of these strategies, you can increase the odds of a seller accepting your bid over the competition. However, it’s important to recognize that you should only make offers that you are comfortable with and that make sense. It can be easy to go overboard on a home that feels perfect but in the end, you want to ensure you are making the right choice and financial decision for your family.
If your offer is accepted and you feel joyous, you probably made a very great bid. On the other hand, if your accepted offer gives you regret instead, you should reconsider. An experienced real estate agent can help you through the home buying process and ensure you submit a great offer and get a great value.
Looking To Buy A Home In The Niagara Region?
As you can see, there are several important considerations to take into account when trying to win a bidding war. Our team of realtors at Davids & DeLaat is experienced in helping home buyers navigate the complexities of a seller’s market. If you’re looking to buy a home in the Niagara Region, reach out to Davids & DeLaat today. Our experience in the local real estate market helps us guide you into making the right home buying decisions for you and your family. Check out the available MLS listings in the Niagara Region to get started today!