Tips for Winning a Bidding War

If you are an agent in today's market, you are well aware of the competitive environment. Being an agent requires knowledge and hustle with a side of grit. That is why we have put together this quick overview on winning a bidding war for a house. 

Currently, inventory is low, and prices are higher than they have been in years- making bidding wars a necessity for many agents. Beat the competition with these helpful tips. 

1| First Offer Over Asking 

You want to have the highest offer from the get-go. Discuss the value of a firm offer with your buyers along with the other earnest statements. Ensure they stay within their budget and are ready to walk away if the deal does not go through within said budget. Use the local market data to communicate the balance needed for a good deal and a secure deal. 

2| Earnest Money Matters 

The first portion of the deposit is the earnest money. Increase that amount with your buyer, showing how serious they are. Earnest money is typically 1-2 percent. Ask the buyer to offer a bit more. 

3| Encourage Higher Down Payments 

Express to the buyer how the deposit makes a more robust deal. Then the seller will feel less threat of the deal falling through. And if they can pay cash for the entire agreement and avoid financing, even better. All-cash deals almost always win. 

4| Discourage Contingencies 

Sellers do not want the home they are releasing to sit on the market. They want the deal done so they, too, can move on. Explain that contingencies risk the deal for the seller- and they do not want that. Help your buyers to find creative ways to avoid having anything hold back the sale. 

5| Encourage Flexibility 

Similar to contingencies- the more your buyer is flexible, the more attractive it will be to work with them. The more amiable your buyer appears, the better the deal in most cases. Let your client know that it is okay for the seller to ask for a specific move-out date, for instance. 

6| Preapproval is a Must 

Your buyers need preapproval more than ever. The preapproval letter offers a mortgage based on bank statements, credit scores, and W-2s. This letter will let the other agents know the client you represent is serious- you know that. But does your buyer? Make sure they get this letter in hand before making offers on homes. 

7| Add a Personal Touch 

Have your buyer write a personal letter to the seller. The letter can include family details, personal reasons for the move, and why you love their home. You would be surprised how it makes a difference. 

8| Offer the Pay the Seller Costs 

Are your clients really serious about this purchase? Ask them to offer to pay the seller's costs. Again, money is not everything, but money does talk! It is a great way to tip the scales in your favor. 

The Bottom Line on Bidding Wars 

The housing market is a seller's dream right now. That may be one of the first things you should communicate to your buyers. As the real estate agent, it is your job to help your client gain acceptance with a firm offer. And depending on their knowledge of the market, they may not know the ins and outs of the business. Communicate the reasoning behind your suggestions as you help your buyer find the home of their dreams. Now, go win all your clients' bidding wars. 

CITED: Keeping Current Matters, Rocket Mortgage, US News Real Estate