Get pre-approved or pre-committed for a mortgage. Offer a large security deposit. Write a “love letter” to the seller. If you want to win a bidding war, waiving any contingency will show the seller that you intend to buy the house no matter what happens.
The seller will see your clean offer as a safe bet because, if the offer doesn't go through, you've already agreed to let the seller keep your real guarantee. When making an offer, make sure it has a short expiration date, ideally 24 hours or less. This way, the seller has to quickly decide whether to accept or move on. Bidding wars occur when a real estate ad receives more than one offer.
During bidding wars, buyers compete with each other for the winning offer. A bidding war is a term used in real estate to describe multiple interested parties who bid on the same home. The seller can decide which offer to accept. And if the offers are similar, the seller can ask potential buyers to increase their bids to outbid each other.
A common strategy for winning bidding wars is to eliminate contingencies or limit the number you include in an offer. In fact, the National Association of Realtors disapproves of those letters and actually prohibits real estate agents from handing them out to sellers. If the seller is buying and selling at the same time, the closing date is likely to be even more critical. While it's impossible to predict the course of the real estate market, buyers can reduce the stress of the homebuying process and potential bidding wars if they have a plan ahead of time.
If you're a seller who's dying to get multiple offers on your home, make sure you're not too greedy. Below is Rocket Mortgage and Amrock's estimated range of charges for the settlement services they provide. With inventory at record lows and most homes selling within two weeks, today's buyers should anticipate bidding wars and the ability to bid on multiple properties before sticking with the winner. Just keep in mind that these strategies are usually only effective in areas that are experiencing a seller's market.
Keep in mind that when seeking to succeed in real estate bidding wars, homebuyers must be careful and avoid offering terms that they can't commit to or that could harm them in the long term. The financing contingency is the agreement you make with the seller that you will only buy the property if your mortgage loan is approved. Keep in mind that not all sellers are willing to accept offers with escalation clauses, but it's definitely worth a try. If you can raise a little more money than the other guy or girl, you're most likely the seller's best option.
The good news is that, for the escalation clause to take effect, the seller will need to provide proof of the competitor's offer so you know that you're not paying more than you actually have to pay. When making your offer, consider making an offer above the sale price to remain competitive. An escalation clause is an addition to your offer to buy that formally indicates that you are willing to increase your offer by a certain amount if another buyer ends up matching yours.