The ongoing recovery of the housing market has meant many homes that are put up for sale are receiving multiple offers. Over at the Wall St. Journal (via Realtor Magazine), a few best practices are outlined in how to win a bidding war without overpaying.
Here’s the list:
- Don’t lowball an offer
- Set a “walkaway number”
- Be Flexible
- Get prequalified
- Be the backup
The first point is perhaps the most important with regards to coming out on top in a bidding war. One real estate professional goes as far as to say it’s best to submit your maximum offer right off the bat. It would be frustrating to lose out on a home to a bid that you would have matched. Also, if your initial bid is to low this could be seen as an insult and take you out of the running.
A “walkaway number” refers to the absolute maximum a buyer is willing to pay. Realtor Mag suggests this be decided at the outset of a home search and should include the amount you can get from a lender, as well as “some extra cushion.” This would cover other costs associated with homeownership including insurance and taxes.
Being flexible refers to strategies that can separate your bid from the pack. This would include things like offering a “rent back” to sellers and negotiating closing dates.
Getting prequalified for a loan is also essential in today’s market. This will show that the buyer has the ability to close, according to Realtor Magazine. Finally, if you ultimately lose out on a home you will want to make it clear to the seller that you are still interested in purchasing the home. Often, a transaction can fall through late in the game and this will allow you the opportunity to step in.
Following these simple steps will greatly improve your chances of buying a home in today’s booming market.