The housing market still has a long way to go until it reaches a full recovery, but continued reports show that things are finally starting to turn around. An article from The Wall Street Journal reported last week that home purchases in March increased by 12.8 per cent from the same time a year ago, up 4.1 per cent from February, and have now reached their highest level in nearly two years. It may be hard to believe it, but the article went on to say that another sure sign that individuals are now re-entering the housing market is that bidding wars are making a return.
Bidding wars occur when there is a limited supply of homes for sale and an excess demand for purchase. While nobody wants to get in a bidding war if it’s at all possible, when it means the difference between claiming ownership or losing grasp of what has become a dream home, homebuyers are usually willing to put forth the effort.
As the housing market continues to make a turnaround, bidding wars will continue to become a more common occurrence. Here are some great tips to help your offer stand out among a sea of other offers as you attempt to claim ownership of a new home:
Introduce Yourself to the Seller
While prying into a seller’s personal life in order to meet with them before placing a bid can actually deter them from considering you as a buyer, if you happen to meet the seller during a scheduled showing then take the time to compliment them on their home and discuss some of the specifics that you like about it. Homeowners have usually become very attached to their home by the time they decide to sell it. Mira Novosel of the Street Directory recommends reassuring the seller that you will maintain the landscaping, keep the original trees, or go without changing the property in a life-altering way in order to provide comfort to the seller.
If you aren’t able to meet the seller face to face, you can also write him or her a personal note as to who you are, why you would like to buy the house, and why you would make a good match for the neighbourhood in an attachment with your offer. Each option makes you more memorable to the seller and helps your offer to seem more personable, thereby increasing your chances of winning a bid.
Avoid Adding Conditions to Your Offer
If your offer on a house is well within your budget then consider leaving out any conditions on financing. No-condition offers are always considered more appealing to the seller since it prevents them from having to pay for any significant repairs that are recommended after an inspection.
If a seller agrees to this and you are able to win your bid by leaving off conditions, you can put forth the remaining money that was not placed on the home towards inspection and personal repairs. While it is true that this is a riskier option for homebuyers, it is a decision that leads to winning home bids time and time again.
Stay Ahead of the Game
The more prepared you are for placing an offer on a home, the more likely your chances are of winning a bidding war. First of all, rather that just getting pre-qualified, make sure that you get pre-approved for a mortgage and have the letter available for the sellers to see at a moment’s notice.
As financial commentator David Weliver points out, sellers are often nervous that a buyer won’t be able to get financing at the last minute, which is why some sellers accept cash as an offer for less than an offer with financing. While it can be hard to compete with a cash buyer, if you have pre-approval it shows a seller that you have already taken the first step in meeting with a bank and receiving a mortgage.
Make Your Initial Bid Your Best Bid
The majority of the time, prospective homebuyers are only allowed one chance to bid on a house before a seller makes a decision. In order to make the best bid possible, first do some research about other homes in the area to help you determine the market value of the home you’re interested in. Next, try to know how many offers are going to be presented on the home since the more offers that are made, the higher the final selling price will probably be.
Once you have gathered enough background information about the home that is up for sale, try to offer the highest price that you can without getting into emotional bidding and offering more than you have available. Offer the highest amount of earnest money or deposit being put down on the home should it be accepted that you can and provide the seller with documentation, such as a bank statement, that shows the source of your down payment.
Offer Extra Time for the Seller
Selling and moving out of a home can be a very stressful experience, requiring the homeowner to coordinate selling, search for a new home, buy a new home, and move from one location to another in what is often a short amount of time. Providing the seller with a little more time than is originally intended, and thus giving the seller a moment to actually sit back and breathe before continuing the whirlwind that is moving, can make a difference regarding which bid a seller decides on.
To start with, offer to give the seller two to three days extra in order to move out after the closing date without asking for compensation. Often, just a few extra days is more than enough to help the seller out in a moving process and you could see yourself one step closer to your dream home as a result.