Since the summer months, buyers and sellers have gone head to head in navigating the home buying bidding wars. Buyers and sellers are on the hunt for their dream home despite the low inventory across the country. It is essential for those entering the market to prepare for the inevitable competition. In August, 59 percent of offers faced bidding wars and 56 percent in September with buyers vying for single-family homes the most. September was the first decline in five months but there is no stopping of competition in sight.
HousingWire spoke with agents in different markets across the country and have “consistently reported bidding wars amid heightened demand for single-family homes, low inventory, and an increase of buyers fleeing big cities.” Sixty-nine percent of homes were on the market for less than a month. How can consumers prepare for a competitive market amidst tight economic times?
1. Work With a Real Estate Professional – Hiring a Real Estate expert for home buying bidding wars will help you navigate the competitive market and provide you the best strategies. They can ensure that your offer won’t go over the worth of a home or your budget. Real Estate agents have the best knowledge of your local market and home values. They will be there to handle the deal professionally and advise you on staying in a bidding war or moving forward. You can put your confidence in an agent to act quickly and get you the best deal possible.
2. Get Pre-Approved – When you are ready to purchase a home, getting pre-approved by a lender is an important step. Getting pre-approved shows the seller that you are serious and qualified to buy a home. When it’s time to make an offer, a pre-approval puts you a step ahead of those who still have to get approved. Often, this can be a deciding factor for the seller. Make sure to work with a mortgage professional to start the pre-approval process early on in your search. Be prepared and give yourself the best chance of walking away with a new home.
3. Waive Contingencies or Create a Clause – When buying a home, contingencies help protect the buyer but can be an obstacle for sellers. Being flexible with certain contingencies can help your bid look more favorable to sellers.
Requiring and passing a home inspection is one of the most common contingencies for buyers. Another could be waiting until the loan goes through. Waiving these ensures the seller you are confident your finances are secure and that you are serious about the home.
In today’s hot market, it could be worth the risk. It’s important to discuss the best plan of action with your real estate agent for home buying bidding wars. Be specific and selective on which you are most comfortable waiving.
4. Make an All-Cash Offer or Increase Down Payment – If it’s in your budget to do so, an all-cash offer may be the best strategy to increase your chance of winning a bidding war. It eliminates any extra financial steps and creates a quicker turnaround in closing a deal. Because of this, some sellers will prefer to take the cash over someone else’s higher bid. An all-cash offer isn’t always an available option for buyers. Increasing your down payment may be a more feasible route. Doing so may show the validity of your bid to sellers making it more appealing.
Additionally, you can talk to your agent about creating an escalation clause. This clause allows you to offer the seller a max amount offer should another bid come in higher. That way, you automatically become the highest bid. An escalation clause can also help you pre-determine a budget you are comfortable keeping. Some sellers may not accept the clause, but an escalation cause may be a great tool to help keep you in the bidding game.
5. Be Personable – go straight to the heart of the home: the sellers! A great way to stand out among others is to write a personal letter directly to the sellers. Share your story with them, catch their emotions by telling them how much you love their home, and give them reasons why you want to buy it. Remember that moving is an emotional process (as you know). Many sellers consider their house a home where families and memories grew. Tell them that you dream of doing the same. Make a connection that will show your values and remember you in extra positive light.
Available homes are receiving multiple offers. These days it’s more common for sellers to review and decide everything at once. Therefore, the opportunity to negotiate may be non-existent. Also, consider offering a flexible closing date in your letter. More time may appeal to sellers when looking for their next home. Show them you are willing to be as accommodating as possible. Going that extra mile by making a personal connection can make an impact when sellers are making their final decision.
Buyers are sweeping up any available homes fast. If you are beginning your home search, make sure to talk with a real estate professional to come up with a plan. Taking action before making any big moves will help you feel more prepared and more confident in navigating today’s competitive world of real estate and get you closer to your dream home.
This article is intended to be accurate, but the information is not guaranteed. Please reach out to us directly if you have any specific real estate or mortgage questions or would like help from a local professional. The article was written by Sparkling Marketing, Inc. with information from resources like HousingWire, Zillow, and Keeping Current Matters.