If you’re searching for a new house and the market is tight, you might find yourself wondering how to win in a bidding war.
But, if you study up and learn how to present an offer the seller can’t refuse, you should be well on your way to landing the home of your dreams.
Four key things you should be prepared to do are:
- Get prequalified for a loan. You might think having a steady job and decent credit is all you need to qualify for a loan. But once you’re approved, you’ll be on solid ground with the seller; you’ll show that you have a funding source to support your offer. Plus, once you’re qualified, you’ll know what amount the bank is willing to lend you so you’ll be able to zero in on your home search.
- Make an attractive offer. If the market is heating up, you want your offer to be fair and attractive. Your real estate agent will be able to provide you with a list of comparable sales in your neighborhood over the few months prior. You’ll want to review how much houses of a similar size recently sold for. Take differing features into account — different back yard sizes, swimming pool, location compared to traffic, remodeled kitchens, etc. You’ll want to offer at least as much as those similar houses sold for. If home prices are on the rise and if you know multiple buyers are clamoring for the same house, you should think about offering an extra 5 or so percent.
- Limit your contingencies (but not the home inspection). If a seller is receiving multiple offers, the first ones to be ruled out are the ones who are asking for too many contingencies. A contingency is kind of like a placeholder offer based on something else happening. A popular one in real estate is making an offer contingent on your current home selling first. A seller with a lot of offers doesn’t want to sit and wait, so forget about making that kind of contingency. However, never give up your home inspection. Always make any offer contingent on the findings of the home inspection. You don’t want to make an offer and later find out the house needs $30,000 worth of repairs.
- Be flexible. Besides offering a competitive price on the house, the next-best thing you can do is offer flexibility. If the seller wants to rent the house back for two months, be willing to agree to that. If they want to move at the end of the month, jump on it. If they want to leave their old, broken refrigerator, don’t complain.
If you have questions about how to win in a bidding war or how to get prequalified for a loan, contact BrightPath Mortgage.
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