Bidding Wars: How To Increase Your Chances of Winning
This is a guest blog post from Tom Lipinski of the Tom Lipinski Team at Keller Williams Lakeside Realty.
Spring is in the air, and if you are looking to purchase a home during the warmer months, you’re not alone. Tight markets this season are making bidding wars commonplace. To ensure you don’t miss out on the perfect home, you may want to consider the following when deciding what to offer.
- Length of home inspection period
When multiple offers are coming in on a home, the smallest details can make the greatest impact distinguishing your offer from the rest. Consider a shorter inspection period if you can swing it. Homeowners are not always thrilled at the idea of taking their home off the market while you do your due diligence. Save everyone time and get it done quickly.
- Increase your earnest money deposit
An earnest money deposit shows the seller that you are serious about purchasing their property. When the transaction is finalized, the funds are put toward your down payment. If you find yourself in a multiple offer situation, increasing your earnest money deposit can set your offer apart from the rest.
- Get a pre-approval letter
While it’s always best to obtain a pre-approval letter prior to making an offer on a home, this is especially true in tight markets where bidding wars are taking place. Submitting an offer with pre-approval gives the seller peace of mind that the deal will not fall through due to the buyer not being able to obtain a mortgage. This is a crucial step that should not be missed if you’re shopping in a tight market.
- Provide all necessary documents
Although this one seems like a no-brainer, things are sometimes missed when you find the perfect home and emotions are in the air. Your offer should be legible and all supporting documents should be submitted with your offer. This includes the seller’s disclosures, your pre-approval letter and any applicable addendums. If things are missing, your offer could get pushed to the side in favor of another that has all documentation.
- Involve your lender
In multiple offer situations, anything and everything you can do to let the seller know you are serious and financially capable of purchasing their home will help sweeten the deal. If you submit an offer and know you are competing, have your loan officer give the listing agent a call to let them know you are strong, capable borrower.
- Have your agent do a CMA
If you’re prepared to make an offer, ask your agent to do a comparative market analysis (CMA) on the home. A CMA is an evaluation of similar, recently sold homes in a specific neighborhood—similar size, condition, age, and style. While it may be tempting to take a chunk of change off the asking price because you feel the kitchen needs updating, it’s important to know whether or not the lack of updates were considered in determining the asking price. Without proper knowledge of recently sold comparable homes, you could let a great home slip through your fingers.
- Consider offering over asking price
Sometimes it’s necessary to offer over asking price when in a multiple offer are on the table. Offering something as small as $1,000 more than the listing price could seal the deal. If you can swing it, consider having your agent write the offer in a way that will guarantee you’ll make up the difference in cash if it does not appraise for the extra money you offered. If that’s a stretch, fear not. The appraisal should keep the seller in check.
- Don’t rush the seller
Although you’ll be eager to find out if your offer will be chosen, a multiple offer situation can bring a lot of emotions, some good and some bad. The seller will be more likely to choose your offer if they don’t feel rushed. Consider a minimum of 48-72 hours to get your offer accepted or countered. With everyone’s busy schedules, you need to allow time for the agent and the sellers to meet so offers can be presented. Give too little time, and yours could expire before the opportunity even arises.
- Write a letter from the heart
Many sellers, especially ones who have lived in their home for a long time, want to know their home will be cherished. They may have many happy memories in the home, have a strong sense of the community, or may have built the home themselves. Regardless of motivation, many sellers want to know the home will be treated the way they think it deserves to be treated. Consider writing a letter to the homeowners acknowledging the positive aspects of the home and maybe share a thing or two about your own family.
These tips will enable you to write a competitive offer if a bidding war arises during your home search. It’s important to remember that emotions will be high when you find a home you love, so make sure the terms will work for you in the long run if you’re offering competitively.
Do you have a question for Tom? Connect with him on Facebook or leave a comment below!
Real Estate Agent Tom Lipinski knows a thing or two about buying and selling homes—he’s been helping clients from West Bloomfield to Birmingham to his current Saint Clare Shores location do exactly that for over 20 years. Over time, Tom has built a reputation for excellent client service and results through hard work, integrity, deep knowledge of the Michigan residential real estate market, and a genuine desire to help others. Through up markets and down, Tom’s clients have always been able to count on his commitment to them, and that will never change.
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