These days, being financially stable enough to put an offer down on a home isn’t enough. We’re living in a seller’s market, with minimal inventory and low interest rates. Did you just find your dream home? So did a handful of other buyers who are just as financially stable and eager. So, what do you do? Walk away and try again later? No! You roll up your sleeves and get ready to go to war…a bidding war.
If you’re shopping for a home in today’s seller’s market, you’re most likely going against several other buyers. According to Redfin, 56% of buyers were involved in bidding wars once they put down their offer earlier this year. In fact, last month, a buyer offered $300,000 over the asking price for a home in Southlake, Texas. This is the world we’re currently living in – but all hope isn’t lost.
Here are four tips to help you win a bidding war and walk away with the keys to your new home:
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1. Get Pre-Approved
Being pre-approved means a lender has agreed to let you borrow money for the home. This is something sellers want to see. Not only does it tell them you’re a serious home shopper, but it means the deal is less likely to fall through due to your finances.
To get pre-approved, a lender will take a good look at your finances. They’ll check your credit history, employment history, annual income, assets, credit score, etc. Based on that information, they’ll either decline or move forward. You should also consider having a pre-approval letter, which provides the specific mortgage amount you can afford based on your finances.
2. Pay In Cash
There’s a good chance your offer will be more attractive to a buyer if it’s a cash deal. By offering to pay upfront, you’re saying you don’t need to apply for a mortgage. This means a seller doesn’t have to worry about the deal falling through because of a lack of finances. They also don’t have to wait through the time-consuming home buying process with a cash offer.
3. Make Sure Your Offer Is Strong
Before putting down an offer, make sure you talk to your agent. You need to have a good idea of how much the house is worth, and how much it’ll probably sell for. These days, those two prices won’t be the same. Because we live in a seller’s market, asking prices are higher so your offer needs to be competitive.
With that said, it’s important you stay somewhat within your budget. Winning a bidding war is great, but if you can’t afford the mortgage once you move in, what’s the point?
4. Work With The Right Agent
In today’s seller’s market, it’s absolutely crucial you work with the right real estate agent. Not only should they be knowledgeable in the market, but able to effectively communicate the ins and outs of the industry with you. The right agent can help you win a bidding war by providing you with additional tips and tricks.
