Winning a bidding war when buying a house is possible, but you might have to sweeten the deal. Depending on where you live, there might be too many buyers and too few houses on the market. As a result, more than one family may bid on a single house. If you're going up against other buyers, there are ways to make the seller take your offer. Here are seven useful tips for winning a bidding war when buying a house.
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1. Don’t Underbid
Keeping your bid reasonable is important when winning a bidding war. In all likelihood, your realtor can provide information as to whether others are bidding on the property. Given this information, you might keep your offer as close to the asking price as possible. If you underbid or offer a low-ball bid, you could lose the property or risk offending the seller.
2. Increase Your Offer for the House
Not only should you avoid underbidding for a house, you might consider increasing your offer. If you offer more than the seller’s price, there's a chance that your bid will outshine other contracts. Just know that the final sale price is contingent on the home appraisal. Therefore, even if you offer more than the asking price, you could pay less for the house if the appraisal comes in low. Only increase your offer if you can qualify (and afford) the higher amount.
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3. Show Your Pre-approval Letter
If you're competing with other buyers for a house, make sure that your realtor includes a copy of your pre-approval letter with your contract. This carries weight when buying a home. Since some people bid on houses before they're qualified for a mortgage, there's always a chance that these people will not secure financing. But if you've already spoken with a lender, and the bank has checked your credit and verified your income, you're a safer applicant in the seller’s eyes.
4. Be Ready to Close
Most sellers are eager to sell their homes and move to the next place. Therefore, they typically prefer buyers who are ready to close within the next 30 days. When your realtor writes your bid, mention that you’re able to close sooner rather than later. If you can close within the next two or three weeks, include this information in the bid. This fact alone can move your bid to the top of the pile.
5. Limit Contingencies
It's okay to ask for contingencies when buying a house. For example, the sale might be contingent on a satisfactory home inspection. But if you start including too many contingencies in your bid, the seller might pass on your offer.
6. Pay Your Own Closing Costs
Sellers can contribute to mortgage closing costs. Just know that if another buyer doesn't ask for this assistance, the seller is likely to go with this person. If possible, pay your own closing, or only ask for a portion of this cost.
7. Know Your Limits
Bidding wars can get crazy, and the cost of a house can increase fast. Don't get caught in a war unless you can afford a higher amount. Before bidding, determine the max that you’re able and willing to pay for a house, and don't exceed this limit.
Bidding wars are stressful and time-consuming, but it's all worth the headache if you're able to get the house you love. Just be careful and don't overspend. What tips can you offer someone caught in a bidding war?
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