As the market swings from a buyer's market to a seller's, you may find yourself facing competitive bids for the home you want. Do not let this situation throw you off the track. Winning a bidding war may not be as difficult as you think. A little bit of knowledge and preparation on your part can minimize your frustration.
- Meet with your lender first. If you walk in to the home with a preapproval letter from your bank, you can move to the front of the line. A seller with multiple offers will often skip past a viable bid if the buyer cannot assure immediate financing. Knowing how much your lender is willing to finance will define your price range so that you can negotiate with confidence.
- Do not make an exceptionally low offer. Do not try bringing a house you cannot afford into your price range with a low bid. The seller will likely reject your offer immediately.
- Be flexible and creative with incentives. If a seller can stay in the house a little longer or avoid doing some minor repairs you do not mind making, let him know you are willing to make the sale easier for him. Your agent may be able to meet with the listing agent to determine what would motivate the sellers, such as a quick closing or rent-back arrangement. A non-cash incentive like a delayed move-out date can be just the motivation the seller needs.
- Provide proof of available cash. If you can make up the difference with cash if the appraisal comes in lower than the asking price, the seller may accept your bid. Beware of offering more than the home is worth. Consult with your real estate agent to consider the wisdom of this option. A higher down payment or a large amount of earnest money may also be attractive to the seller.
- Be prepared to meet the terms of a counteroffer. In order to do this, you must be fully prepared to make higher payments. Be sure you are capable of doing so and that your lender will still finance the transaction.
When you meet with your real estate agent, be completely honest about your resources and your willingness to negotiate. As your representative, your agent can advise you about creating an attractive offer. He will also help you find creative ways to sweeten the deal and make winning a bidding war a reality.