How to Win in a Bidding War
With little inventory and low mortgage rates driving buyer activity, bidding wars are becoming quite common and competitive. As multiple-offer scenarios heat up it’s important to be prepared so you can put your best foot forward – quickly and efficiently.
Get a Underwritten Pre-Approval
You should know by now that being pre-approved is the first step to buying a home. In this competitive market where buyers are waiving their financing contingencies, you should take your pre-approval one step further and get an underwritten pre-approval.
Underwritten pre-approvals have gone through an extra layer of lender scrutiny and that is what makes them so thorough. The underwritten pre-approvals are almost becoming the new pre-approvals as many buyers are opting to get this level of pre-approval. (For more about the difference of a Pre-Approval and an Underwritten Pre-approval check out our post on Pre-Approvals)
To feel more confident about your financing and make your offer stand out, request that your lender have your file pre-underwritten. If you are looking for a lender who can underwrite your pre-approval contact us for a list of our preferred lenders.
Make a Solid and Competitive Offer
In a competitive offer situation, don't expect to get to a counter. In many cases, the sellers will just select the best offer.
How do you know what a solid and competitive offer is?
Your agent should understand the market and what type of offers are winning. Also, communication with the listing agent is important.
Your agent should develop a good rapport with the listing agent, and try to find out what details are important to the seller in order to ensure that your offer will stand out.
Will the seller need things like a rent back or a quick close? Or are they in the process of buying another home? These details are important in crafting an offer that will appeal to the seller's worries.
At the end of the day, your goal is to make sure your offer stands out among the others— with a strong price and terms that the seller is looking for.
Lastly, your agent will need to communicate frequently with the seller's agent on the offer date to find out what the level of competition is and as many details as possible to make sure you can write a solid and competitive offer.
As the market gains steam prices can shoot up in our area, and shoot up quickly. In the last few months many houses have sold within a short time of being listed, and homes will likely sell even faster as the market gets hotter.
As soon as a home hits the market make an appointment to view it with your agent. Once you decide you are interested be sure to review the disclosures as soon as possible.
Your agent will need to communicate with the listing agent and ask about the process the seller is going to take to review offers.
In many cases, agents may be willing to look at offers before a set offer date or take what is referred to as a pre-emptive offer.
If you are sure about the home, your best bet is to try to buy it before other offers are made. The best way is to make a pre-emptive offer, and your offer will need to be convincing enough for the seller to accept it.
A personal letter can be a powerful tool to help your offer get noticed. These days lots of buyers are writing letters to sellers in hopes to persuade them to accept their offer.
Although sellers ultimately will be more focused on your offer's price and terms than a well-written letter, a letter will help you if you are neck in neck with another offer.
It's the thing that may help you connect with the seller and make them decide to sell you their home. Sellers also are leaving behind neighbors and want to make sure the next family would be a great fit for the neighborhood.
My advice is don't make the letter too long or too personal. Just one page or a few paragraphs is enough. Include a photo of you and your family if possible, and be sure to let them know who you are and why their home is so important to you.
Your agent is your key to winning in a competitive market. Their connections, network, and expertise are what will help ensure that you can buy your dream home.