Tips to win a bidding war
In a seller’s market, when demand is high and inventory is low, buyers often have to go above and beyond to make sure their offer stands out from the competition. That, unfortunately, is increasingly becoming the case as of late. According to a Redfin survey in January, over 56% of buyers are facing bidding wars in their offers. And over two-thirds of offers written by Redfin agents in March faced multiple offers, according a separate survey released in April.
While there’s no science behind winning a bidding war on a house, there are things that you can do to increase your chances. Here’s what you can do as a buyer in a seller’s market.
8 tips to win a bidding war on a house
- Work with an experienced real estate agent
- Be prepared and fully pre-approved
- Explore a fully underwritten pre-approval
- Raise your offer
- Understand your options around contingencies
- Button up your dates
- DON’T write a personal letter
- Finally, know when to say no
1. Work with an experienced real estate agent
The most important thing that you can do is work with a great real estate agent. You want to make sure that you work with someone that is an agent full time, understands the local market, and has the experience to help you make a strategic, winning offer. If you are already working with a Proper Rate loan officer, ask them for a recommendation.
2. Be prepared and fully pre-approved
This should be absolute number one, and ideally completed before you even start looking at homes. Since sellers want offers that will not fall through, it’s imperative that you are fully pre-approved before making your offer. The pre-approval process at Proper Rate can be completed simply and securely through our online application.
3. Explore a fully underwritten pre-approval
Pre-approval is a great first step, and helps show sellers you’re a strong and qualified buyers. But what’s better than a pre-approval? A fully underwritten credit pre-approval. One way Proper Rate helps you strengthen your offers further is through PowerBid Approval, which quickly verifies your credit history, income and assets.* After completing the more extensive pre-approval process, buyers are able to make an offer that stands out from other financing offers and even help compete with potential cash buyers.
4. Raise your offer
There are several factors that play into who wins a house, but offering the most money for the house is a winning strategy, as most sellers want to receive the highest amount of money for their house. Before you increase your offer, there are a couple of steps you should take. First, talk to your Loan Officer about how upping your offer will impact your monthly mortgage payment. Second, consult with your real estate agent to make sure you’re not overpaying for a house. Your agent will be able to compare the house to home values and recent sales in the area.
5. Understand your options around contingencies
Contingencies are certain things that must be met in order to close a deal on a property. If they’re not met, the buyer is allowed to back out without losing any money. In a seller’s market, you’ll see an increase in waived contingencies so as a buyer you should understand what these mean and talk to your real estate agent and lender to see if any of these make sense for the property you are buying.
A word of warning though: waiving inspections can cause some serious financial headaches down the road, so only explore this option after speaking to your real estate agent. Also, see if there are creative ways to think about the problem. For example, if you’re thinking about waiving inspection, get a pre-inspection done at the time of the open house.
6. Button up your dates
Find out what is important to the seller in terms of time frames. Some sellers want to close quickly. Others want more time. They made need to find another house themselves, or they may not be ready to pack up and move just yet. Have your real estate agent find out what time frames work best for the seller and tailor your offer to their needs.
Sometimes you need to move REALLY FAST, and that's why Proper Rate created Same Day Mortgage.** This can provide you with a loan approval in as little as a day. Talk to a Proper Rate loan officer about this option because it may allow you to win the bidding war before it even starts.
7. DON’T write a personal letter
The practice of writing a personal love letter to the seller of property used to be suggested as a way to help strengthen an offer, the idea being that its appeals (perhaps accompanied by smiling photos of your family) would humanize an otherwise sterile offer letter. But the National Association of Realtors has recently increased calls to no longer follow this practice, as it can run afoul of fair housing standards and lead to unfair bias in the housing selection process.
Instead of penning a long missive to the seller, let the seller know how much you love the house through your agent.
8. Finally, know when to say no
If you’re a buyer, a final important strategy is knowing when not to enter a bidding war. Have conversations with your partner, real estate agent and loan officer about how high is too high to go, and stick to it. As any good card player will tell you, you need to know when to hold ‘em—and when to fold ‘em.
*Appraisal required for eligibility and subject to conditions.
PowerBid Approval (the “Approval”) is contingent upon receipt of executed sales contract, an acceptable appraisal supporting value, valid hazard insurance policy, and a re-review of your financial condition. Proper Rate, Inc. reserves the right to revoke this Approval at any time if there is a change in your financial condition or credit history which would impair your ability to repay this obligation and/or if any information contained your application is untrue, incomplete or inaccurate. Receipt of an application does not represent an approval for financing or interest rate guarantee. Not all applicants will be approved for financing. Restrictions may apply, contact Proper Rate for current rates and for more information.
* Same Day Mortgage Full Disclosure
Proper Rate’s Same-Day Mortgage (aka “FastTrack”) promotion offers qualified customers who provide certain required financial information/documentation to Proper Rate within 8 hours of locking a rate on a mortgage loan the opportunity to receive a loan approval within 1 business day of timely submission of documentation and does not suggest that the borrower will receive funding on the same day as their application submission. For purposes of this offer, documents provided after 1 pm local time or on a weekend or company holiday will be deemed submitted the next business day. Proper Rate cannot guarantee that a loan will be approved or that a closing will occur within a specific timeframe. Proper Rate reserves the right to revoke this approval at any time if there is a change in your financial condition or credit history which would impair your ability to repay this obligation. Read and understand your Loan Commitment before waiving any mortgage contingencies. Borrower documentation and Intent to Proceed must be signed within 8 business hours of receipt. Not eligible for all loan types or residence types. Minimum down payment requirements apply. Self-employed borrowers and Co-borrowers are not eligible. Not all borrowers will be approved. Borrower's interest rate will depend upon the specific characteristics of borrower's loan transaction, credit profile and other criteria. Eligible borrowers who successfully provide all required documentation within 8 business hours will receive a $250 Closing Cost Credit applied at closing, no cash value, and may not be combined with any other Lender promotions, discounts, or concessions. Not available in all states. Restrictions apply. Visit rate.com/same-day-mortgage for terms and conditions.