How to win a bidding war
9 ways to improve house-hunting odds in a sellers’ market
If you’ve been looking for a house to buy, you probably already know this, but the market is tight. The limited choice of homes for sale, while disappointing for buyers, is nothing new.
With reduced availability of homes for sale, many buyers are more likely to need to compete with other buyers for the home they want. The most important way to train for the competition is to be fully financially prepared for the purchase.
Once you have your finances in order and a solid sense of your price range and priorities, try these tips for a better chance at offering the winning bid. 1. Get preapproved for a loan. Don’t just talk to a loan officer to check out your potential loan qualifications. To get preapproved, you will need to submit all the documentation you need for the loan all the way to the underwriter who will review your file and then provide you the all-important preapproval letter. 2. Better yet, have cash. While very few buyers can do this, an all-cash offer typically wins a bidding war. Frankly, all offers are cash to the seller whether you have a mortgage or not — it is the speed to settlement and the removal of the financing uncertainty that make your cash offer feel stronger to the seller. If you hate the idea of tying up every bit of your cash, you can buy the house and take out a mortgage on it after the closing. But there are limits to that, so see a mortgage professional ASAP to make sure your plan will work. 3. Consider making a larger deposit. A larger earnest money deposit with your offer shows sellers you are serious and have the money to buy their home. But make sure you meet every deadline and contingency in the contract so you can get your money back if the transaction doesn’t go through. 4. Waive the financing contingency — maybe. If you are 100 percent certain of your loan approval, you can waive the financing contingency. Just make sure the loan really will come through, because if your offer is accepted and the loan falls apart, you’ll have to come up with the full price in cash.