How to Win a Home Bidding War Using these 4 Strategies
Buying a home is certainly a rewarding experience. However, securing a home isn't always easy. Between finding the perfect home within your budget and getting financed, the process can be overwhelming for many prospective buyers.
Even more, buyers often find themselves in a bidding war. This can make landing your dream home feel next to impossible.
The good news is that overcoming a bidding war can be done using the right tactics. Today we're going to provide four tips you should take to land the home of your dreams, even when you're competing with other buyers.
1. Pre-Approval Letter
A pre-approval letter is a document from a lender stating that it is willing to lend you a certain amount of money to purchase a home. Having a pre-approval letter adds leverage in a bidding war because it shows sellers that you are a serious buyer and that you can afford the home.
2. Write a Letter of Intent
A letter of intent is a formal communication to express your desire to purchase the home from the seller. While this letter is a non-binding agreement, it shows great initiative and a desire to purchase the home.
Many sellers will request a letter of intent before making a binding contract. With that said, bringing a letter of intent to the table can give you leverage over other buyers who are bidding for the same property.
3. Show You Have the Money
Providing proof of funds is a great way to get the attention of sellers. Ultimately, they want to sell their property quickly without too many bumps in the road. For this reason, they'll likely choose buyers who are transparent, trustworthy, and ready to do business.
Showing sellers that you actually have the money to purchase the home will give you clear reign over other buyers. This is because sellers are able to remove a lot of the guesswork, have a stress-free transaction, and essentially meet their goals.
4. Shorten the Contingency Timeline
Contingencies are an important part of a real estate transaction. For buyers, it's an opportunity to protect their interests. But for sellers, this process can be less than desirable.
Common contingencies include an inspection contingency, mortgage contingency, and appraisal contingency. These types of contingencies are certainly a great idea for buyers. However, be mindful of how long these contingencies last as they will likely steer sellers away.
Remember that sellers want the real estate transaction to be as quick and seamless as possible. Lengthy contingencies don't just exasperate the process, but it creates a lot of opportunities for the prospective buyer to back out. With that said, if you want to win a bidding war, minimize contingencies as much as possible.
Home bidding wars can be discouraging, but they don't have to be. If you find yourself competing for your dream home, it's best to quickly give yourself leverage over competitors by incorporating the right strategies to entice the seller.
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