How to Avoid a “Bidding War”
With a tight housing supply in many desirable areas, “bidding wars” have become commonplace. Put simply, a “bidding war” is when two or more prospective homebuyers attempt to outbid each other for the purchase of a particular home. For home sellers, this can be great, but for buyers, it can end up being a budget-breaking process. It is important to know whether to bid high or let the overpriced property go. Here are some practical tips on how to avoid a bidding war:
Offer a good price immediately: while not always the best strategy, if you are afraid that a bidding war could erupt, submit the best offer you can up front. This may attract the seller and get them to accept your offer immediately. Make sure to do research up front to determine home values in this area and use this research to strengthen your offer. If the asking price seems low or reasonable, agree to it or offer a little more to speed up the buying process.
Show them the money: If you have cash, make it known immediately, as it is always the most attractive to a seller. If you don’t have cash, make sure to have a preapproval letter and submit it with your offer. At the end of the day, they want cash or proof of funds so this will help a lot.This will show the seller that you have the ability to source the money you need for the home purchase.
Eliminate seller’s contingencies: Things that fall to the buyer such as minor repairs and cosmetic fixes should be waived. This will make your offer more attractive by making it easier on the seller. Conversely, your end of the offer should have no strings or contingencies attached to it. Remember, it’s all about making the home purchase as easy as possible for the seller.
Be flexible: You should do everything you can to be as accommodating to the seller as possible. This means being flexible with the closing date. The buyer may have a specific time in mind for their move-out date, being flexible and having the ability to meet their timeline will go a long way in closing the deal.
These tips are by no means a guarantee that you will avoid a bidding war, but they are a great way to improve your chances of securing the deal.
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