In a seller's market, you could end up in a bidding war for a home that you want. You can choose to walk away from the home or continue to bid. Unless you have an unlimited budget, you need to find a way to win the home and not go bankrupt doing it. If you are in the midst of a bidding war, here are some strategies you could use to come out on top.
In most instances, the seller will accept the highest offer. However, there is another factor that could influence a seller's decision. Flexibility from potential buyers is important. The more flexible you are, the more likely it will be that you get the attention of the seller.
For instance, if the seller requests more information from you, provide it. If the seller does not want to pay for minor repairs, agreeing to pay for them yourself could make the difference between winning the bidding war and losing it.
It is important to note, there are some areas in which you should not be flexible. If the seller wants to skip the home inspection, you should be concerned. A home inspection helps to uncover hidden problems with a home, which can protect you from making a poor investment. Without the home inspector's report, you could end up paying for major repairs.
Include an Escalation Clause in Your Offer
You could potentially lose out on a home before you have a chance to decide if you do or do not want to increase your original bid. The seller could accept a higher offer than yours without first giving you the chance to raise your bid. To avoid this, you can include an escalation clause in your initial offer.
The escalation clause would allow you to submit an offer with the least and most you are willing to pay for the home. In the offer, you would state by how much your starting offer could be increased by if you are outbid. For instance, if you are outbid, you could state that the seller can add $1,000 to your offer so that your bid is once again the highest bid. Once the bidding war reaches your maximum, you can choose to tap out or increase your limit.
The seller would have to provide proof that you were outbid before the increased bid would be accepted by you. The seller also has to prove that the other bidder was qualified to actually buy the home.
Work with your real estate agent, such as LEGENDS REALTY, to ensure you are doing everything possible to win a bidding war