It’s becoming a war out there when it comes to buying a home.
An increasing number of would-be homebuyers are finding themselves in fierce competition, as more and more sellers are fielding multiple bidders on their properties. According to recent data from Redfin, some markets saw 73 percent of homes on the market draw in multiple bidders.
“The houses that are in good shape … are getting several offers,” says Tony Geraci, broker and owner of Century 21 Homestar in Highland Heights, Ohio.
So what does it take to claim victory over your competitors if you find yourself in a bidding war? Here are some helpful tips:
1. Keep it simple.
“Don’t put a lot of contingencies on your offer,” Geraci says. That means, don’t make the seller negotiate too much on price or down payment, and don’t make a ton of requests on, say, home repairs.
If you require a lot of back-and-forth and have a lot of demands for the seller, he or she is likely to turn to another bidder who’s a bit less needy.
When it comes to repairs, “It’s time and money for [the seller],” Geraci says. So don’t waste a lot of either.
2. Put your best offer on the table.
When you’re up against stiff competition, it’s not the time to lowball.
“You might not get a second chance,” Geraci says, adding that the seller may not counter your offer if it’s well below other offers. So put your money where your mouth is.
And if this is your dream home, then be ready to offer more than the asking price. After all, if you see yourself in this house for 10 or 15 years down the line — or even longer — then “don’t worry about an extra $4,000 or $5,000,” Geraci says.
3. Make it personal.
“Tell the seller how much you’d love to raise your family in that person’s home,” says Tim Dwyer, president and CEO of Entitle Direct, a title insurance company.
Personal, emotional appeals can sometimes tip a seller’s decision in your favor. Establish a rapport, and it will likely set you apart from the crowd. It can also give the seller “a very strong sense of the fact that [the buyer wants] to close the deal,” Dwyer adds.
4. Come prepared.
Come to the showing with a pre-approval letter from the bank. When a seller can see that a bank already has extended their willingness to finance the deal, it lends credibility to the buyer and edges you closer to getting the home.
5. Offer incentives.
Up your “good-faith deposit,” Dwyer says. Buyers generally put down deposits — typically 1 percent of the purchase price — on a home to show their intent to buy. Dwyer says that increasing that amount to 3 percent or 5 percent will solidify to the seller that you’re ready to close the deal.
You also can offer other things, such as picking up the tab for title insurance, which will leave the seller with more money in his or her pocket.