Bidding for a house that people are falling all over themselves for requires skill and expertise. In fact, merely showing up with the largest bid might not be enough to win. Here are three secrets that will make your bid better than your competitors':
Sort Out Your Financial Issues
For a hot house, presenting a sizable bid may not be enough to win; you also need to reduce the financial risks for the seller. No seller wants to go through the process only to have the sale fall flat at the last minute. This means you have to get your financial house in order first to assure the seller that they will get their money if they sell the house to you. Here are two ways of doing this:
- Get pre-approved – Don't confuse this with pre-qualification, which simply means getting a rough idea (from your lender) on the mortgage amount you can get. If you are pre-approved, it means you have a specific mortgage for which you are approved.
- Promise cash – Offering to pay cash is a smart way of winning a bidding war because it eliminates several risks, including the risk of the loan not going through. Paying cash can also accelerate the closing process.
Show That You Love the House
Another way of showing the seller that you are serious about the purchase and aren't likely to back out of the deal is to show your love for the house. Merely saying that you love the house won't cut it either; you need to be specific with your preference for the property. For example, if your kids love tree houses and swings, and there is a suitable tree in the backyard, you can tell the seller about it. Once you show the connection you feel for the house, and you have the ability to pay for it, the seller is more likely to take you seriously.
Go Easy On the Contingencies
The last secret is to avoid bogging down your bid with contingencies. From your point of view, buyer contingencies are good because they protect you from unforeseen risks. From the seller's point of view, the more contingencies you have, the more likely the deal is to fall flat, which costs the seller time and money.
This doesn't mean that you have to eliminate all your contingencies; you just need to prioritize and get rid of the non-essential ones. For example, making your purchase offer contingent on the seller's disclosure of the property's defects might be smart and necessary. However, waiting for your spouse's approval or insisting on some minor repairs don't make smart contingencies and might just scare away the seller.
For more tips and advice, contact a real estate broker.