Tip: Winning the Bidding Wars
Hot real estate markets bring out the worst in everyone. Sellers become
greedy and demanding. Buyers become desperate, frustrated and
disillusioned. And real estate agents get caught in the middle as they try
to negotiate purchase contracts that are acceptable to both sides of the
Along with frayed nerves, hot markets mean multiple offers will be
received for just about every for-sale home. These bidding wars are great
for sellers, but they add to the "freaked out" factor for buyers. How can
you buy the home of your dreams when several other people are also bidding
on it? Here are six tips:
1. Make your best offer. Let's face it, the bottom line is the most
important consideration for most sellers. They're naturally looking to
sell their home for the highest possible price. If you want to win a
bidding war, offering the highest price - something attractively above the
asking amount--is a sure way to get the seller's attention. Most sellers
who receive multiple offers only seriously consider those at the top of
the price heap.
2. Cover the seller's costs. Of course, price is only part of the equation
when it comes to the seller's net proceeds from the sale. An offer with
a slightly lower price can triumph if the buyer agrees to incur more of
the transaction costs. Pay 100 percent of the escrow fees. Purchase your
own home warranty, instead of asking the seller to buy it.
3. Show you're serious. Offer to make a large earnest-money deposit and as
large a downpayment as you can. Putting more money on the table up-front
shows the seller you're serious about the transaction and willing to put
your money behind your intentions.
4. Get pre-approved. Attach a copy of your mortgage pre-approval letter to
your purchase offer. A prequalification letter is helpful, but a full
approval, subject only to an appraisal of the property, is even better.
Sellers favor buyers who demonstrate that they're financially able to
close the transaction. Agents advise getting your pre-approval letter from
a local mortgage broker or lender who has a good reputation among the
5. Work with a real estate agent who is successful and well-known to other
agents. Your agent's professionalism - or lack of it - reflects on you.
Also, if your agent will be faxing your offer instead of presenting it in
person to the seller, a cover letter should be attached. The letter should
be addressed to the sellers and should outline the strengths of your
offer. (Making sure the paperwork is neat and legible helps too.)
6. Don't add unusual or unnecessary contingencies or requests to your
offer. Sellers know extra contingencies (e.g., the approval of in-laws,
the sale of another residence) can delay the transaction or create a
loophole for the buyer to bow out of the agreement. Special requests
(e.g., the right to purchase appliances or move in early) complicate the
offer and distract both sides from more important elements. On the other
hand, don't waive standard inspection and financing contingencies unless
you thoroughly understand the considerable risks.