How to Win Bidding Wars …Every Time!
They are a sign of the times. “Bidding wars” or “multiple offers” are becoming more and more popular. Often homeowners will slightly under price their home to attract multiple buyers and to get them to compete with one another. What does this mean for you? Often the selling price is considerably higher than the asking price and often with little or no conditions for the buyer to back out.
But don’t worry. As long as you know the rules, you can win the game! After representing MANY buyers who have had the honor of participating in multiple offer situations I have figured out how to win EVERY time!
Here are some tips that will make your offer the winning offer.
1.Know the market value of the home – Have your Realtor search the comparable homes that have most recently sold in the neighborhood. You want to know what the home is worth and what is too much to pay. Be prepared that some people will be willing to pay more than market value. It is up to you if you want to do the same.
2.Make sure you are pre-approved for the mortgage – Not only do you want to make sure in advance that you qualify for the mortgage that you will need on the home but you also want to make sure in advance that your lender will also approve the home based on the price that you want to pay.
Most people don’t realize that the mortgage pre-approval is a 2 step process. First, you are approved to be lent a certain amount of money based on your income. Second, the bank must approve that the amount that you paid for the home is what they are willing to lend you for that particular home. The bank will not give you more money for a home than they think it is worth.
So if offers are to be held until a certain date, call the bank and ask them if there will be any problems getting the approval based on the price you want to offer.
3.Get a home inspection in advance – If a homeowner is holding off offers until a certain date then you have time to have a home inspector come and inspect the home prior to the date of the offer. This will ensure that you know what you are buying. If there is an issue with the home you can adjust your price to reflect that.
The only down fall to this is that you pay for the home inspection prior to knowing if you have purchased the home. A home inspection can run anywhere between $300-500 and upwards depending on the size of the home. It may however be the best money you ever spend.
4.Have a certified cheque submitted with the offer – Most buyers never think to do this. By giving the deposit cheque upfront you are proving that you are serious about the home and have the money to back up your offer.
It has been known to happen that a buyer will wake up the next morning after paying over the asking price and will have buyer’s remorse and not deliver the deposit cheque as promised. By bringing the deposit with the offer you are showing that you intend to close the deal if your offer is accepted.
5.Have your agent present your offer in person – an offer that is sent my email or fax has no emotional relevance. Quite often sellers are very attached to their homes. They often want to know that nice people have bought the home that they have shared with their family for many years.
A face to face meeting with your agent will create an opportunity to get to know you better and why you are great fit for their home. Just make sure that your agent is personable. It will make all of the difference.
In summary, there is never any way of knowing what the other competing offers are. The strategy to use is to put your best foot forward, as most likely you will only get 1 shot at it. If you follow these steps you can make a clean offer without any conditions and with little risk to yourself. You will know in advance what you are buying and if any repairs need to be addressed. The bank can give you a pre-approval based on what price you want to offer for the home and the seller will be pleased because your offer will be firm.
I say that you will win EVERY time…and that is true. Even if someone else is willing to pay more money than you, if you have done your research and know the highest price that you should pay, then you will never overpay. And that is winning EVERY time!!