6 WAYS TO WIN A BIDDING WAR WITHOUT OVERSPENDING https://www.trulia.com/
When you hear “bidding war,” visions of rapid-fire auction chanting might come to mind: One dollar bid, now two, now two, will you give me two … sold! This sort of bidding war at auctions is all about the dollars. But when you enter a bidding war for a home, other factors besides money can come into play. The important thing to keep in mind is not to offer to pay more than what you can afford. Here are six ways to win a bidding war without overspending.
1. Know what you can really afford As far as emotional purchases go, buying a home ranks right up there with choosing a wedding dress — only the financial stakes are much higher. Unless you know ahead of time exactly how much house you can afford, you could easily be sucked into spending too much. Your lender or financial adviser can help you determine that number. Then it’s time to play ball. 2. Talk with the listing agent You can put in an offer, but unless your agent makes the effort to speak with the listing agent, your offer, in a multiple-offer scenario, will probably not stand out. Gary Hughes, a Virginia agent, recently received 13 offers for a property he listed. “Twelve were just emailed, and the buyers’ agents did not speak to me,” he says. But one agent called and had the mortgage lender follow up. “The lender and the buyer’s agent were able to address a concern in a way that assured me it would get to settlement. It wasn’t the highest offer, but it was close. Those conversations made all the difference.” 3. Propose a shorter closing It’s always beneficial to find the seller’s motivation for selling (if you can). Let’s say they just accepted a new job in another part of the country. This seller is probably highly motivated to sell quickly. “If you can close the deal in two or three weeks, you may win over the higher offer that comes with a six-week closing period,” says Eric Bowlin, a real estate investor. 4. Rent the house back to the sellers Some sellers aren’t interested in a short closing at all. In fact, the opposite could be true. Sellers who don’t have to sell quickly but who are just making a change, such as downsizing or upsizing, might want a long closing or some sort of flexible deal to give them time to find their new home. “Being able to rent back the property to the seller for a few months while they solidify their next purchase can go a long way into not needing to overbid on the property,” says Aaron Norris, a California real estate investor with The Norris Group. 5. Submit an as-is offer The fewer conditions you put on buying the house, the more attractive you look to sellers. Consider offering to buy the house as-is. Miami Beach, FL, agent Jill Hertzberg says, “You can opt out of conducting inspections.” But since this is an extremely risky proposition, Hertzberg suggests instead of waiving the inspection altogether, decrease the inspection period to two days maximum. Lilia Biberman, a Boca Raton, FL, agent says to only waive the inspection “if you have a firm grasp of all the possible defects a property may possess and the costs associated with remedying those defects.” Also, if you’ll be paying in cash, you don’t need a financing contingency, which protects buyers who don’t secure financing in time. 6. Pay more in cash In a bidding war, the value of the house (the price people are willing to pay) doesn’t always match the appraisal, which could come in lower. If you can throw in the extra cash to make up for a low appraisal, don’t keep that piece of information a secret. “If you are willing to bring cash to close — such as adding the difference between the appraisal value and sales price to your down payment — make sure to put that in writing,” says Tiffany Alexy, a North Carolina agent.
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