In a competitive market, many home buyers may be forced to bid against others in order to purchase a new home. This is extremely common for desirable real estate. There are some do’s and don’ts during this process that will give you an edge against the competition.
Do: Recognize when You are in the Middle of a Bidding War
The first step to bidding wars is realizing that you are in the midst of one. This takes a little bit of research on the market you are looking to buy in. Certain markets are far more competitive than others. One way to get a real sense of the competition is to attend the open house for the home you are looking to purchase. This will give you a rough estimate of the potential buyers. The surefire way to know is when you make an offer, and your real estate agent tells you there have been higher bids.
Don’t: Lowball an Offer
One of the worst things a home buyer can do during a bidding war is to low ball the offer on the home. This is a clear way to lose the home of your dreams. Make a strong figure for your offer and try not to use round numbers, add a 1 or a 6 towards then end to make it stand out.
Do: Be Organized
Being highly unorganized is horrible during a bidding war. It’s not nicknamed a bidding war for any old reason, just like winning any other war, it requires organization and strategy. Make sure your offer packet is neat and legible. Make sure you understand any sort of deadlines or stipulations the seller may have, like formatting for the offer packet. Be sure to include a pre-approval or proof of funding.
Don’t: Forget Your Limits
We all have things that limit us in life, and this is true when buying a new home. Put your best offer up front, because you may not be able to submit after that. Add an escalation clause which states how much you are willing to outbid another buyer up to a specific figure. This is only recommended for people who absolutely desire a specific property. Don’t overextend yourself and push past your limit.
Do: Sweeten the Pot
Sometimes adding a pre-approval form to your packet isn’t enough. In certain cases, you need to make the deal a little sweeter. There are a few ways you can do this. Money talks in a competitive market. The first being pay upfront in cash if you have the means. If not, consider adding more to your down payment. Another way is to offer to offer to pay the seller’s closing costs.
Don’t: Make an Offer and Go Out of Town
You should never make an offer in a competitive market and then go out of town. Sellers will likely pass on your bid if you aren’t available to reach. In order to win a bidding war, you have to be in the trenches.
Depending on the time of year, competitive markets can go influx. Talk to your real estate agent to know how competitive your market is. If you are looking to purchase a home in Encinitas California, I’d be happy to help you find the home you are looking for. Give me a call or send me an email and we can discuss your home preferences.