The real estate market today is increasingly competitive. And with a competitive market comes bidding wars. With so many bidding wars taking place, we wanted to take a moment to discuss the best strategies to win a bidding war.
Having your financing lined up is one of the best ways to make your offer attractive to sellers. In order to do this, get a pre-approval from a reputable lender. In our experience, we’ve found that using a local lender that the seller’s agent may have worked with in the past can help you win a bidding war. Why? Because the seller’s agent is more likely to trust someone they know and they know the lender’s reputation.
If you obtain your pre-approval online, that’s still a great step. But the seller’s agent doesn’t know who did the pre-approval or what guidelines were used.
Here at Mortgage Specialists, of all the pre-approvals we have ever given, 99.9% have closed. We have such a high closing rate because we only give someone a pre-approval after verifying all of their documents are accurate.
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Ask about the seller
Another great way to win a bidding war is to ask your real estate agent to inquire what is most important to the seller. In some cases, the price isn’t the most important. Some sellers would prefer to get less money if it means they can close sooner or have found the perfect family to care for their former home.
Is there something about the home that you really love? Include a letter of specifically what draws you to the home when you submit your offer. Sometimes a personal touch can go a long way in tipping the scales in your favor.
Get a conventional loan
Sellers don’t like FHA loans because they’re government-insured loans, meaning they have stricter guidelines. For example, if the home is appraised for less than the agreed-upon price, the seller is required to reduce the selling price to match the appraised price.
Another major reason sellers don’t like FHA loans is because the guidelines require appraisers to look for certain defects that could pose habitability concerns or health, safety, or security risks. If any defects are found, the seller must repair them prior to the sale.
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Save additional money
In case a bidding war breaks out on a home you have your heart set on, we recommend having a little extra money saved up so you can compete with other offers. While the strategies above are helpful, sometimes it comes down to the amount of money you’re able to offer. When you’re trying to win a bidding war, it’s nice to know you’re prepared to increase your offer.
Ready to start the mortgage process? Our online application takes anywhere from 5-20 minutes to complete. Once it’s submitted, we can have you pre-approved for a loan in just a few hours.