You’ve found the lakeside home of your dreams, and you put in a bid on it, but the next thing you know you’re in a bidding war for the home. How does this happen? What should you do next? And, perhaps more importantly, what shouldn’t you do next? Here are a few tips to help you out if you find yourself in the middle of a bidding war.
Bidding wars are most common in popular areas or in cities, but can also happen on lakes which often have limited inventory.
As the economy recovers in areas where properties are scarce, it’s harder to find desirable homes. With reduced inventory comes increased competition, hence the bidding war.
Now, here are some tips to help you get the home you want.
1. Do your homework and hire an experienced real estate professional who is familiar with not only the area, but the lake in particular. Their knowledge of the local market, real estate regulations, and the overall process will be invaluable throughout the experience.
2. One tactic that can get you ahead of the competition is to get your loan pre-approved. Pre-qualification is not the same thing, as it just means you could get a loan for a given amount. Pre-approval, on the other hand, means you have the finances ready so when you make an offer, you can actually pay for the home.
3. Another piece that can help you is if you have a significant down payment. Having that cash on hand shows that you are a serious buyer, and puts you ahead of the potential buyers who are not as financially set. Your offer should be a firm offer, and your best one. If it is, the seller will be more likely to think of you first.
4. If you have done your research on homes in the area, you know what similar homes have sold for, so you can put in an accurate bid. It keeps you from low-balling, or from coming in too high.
5. When you make your offer, try as to keep out any extraneous restrictions or requirements. Those can slow down the process and frustrate the seller, putting your offer at the bottom of the list. If there are legitimate things you need to have addressed, like repairs to the home, that is a different matter.
6. That said, you should have a good inspection conducted on the house that is thorough enough to check all structural issues and things like plumbing and wiring. That can help keep you from looking at properties that will need a lot of work done. You should plan on paying for this yourself and not put that cost onto the seller.
7. Come back to the home after doing your first walk-through to see if you still love it. It could even be at a different time of day to check how the light looks in the evening, or what that brown paint does on a rainy day. This step helps you be rational about your bid instead of getting swept up in the emotion.
8. Have your agent find out from the seller what the magic trigger is that would make them close now. Is it a matter of changing the closing date? Should you include closing costs to help the seller out? What is the key motivating factor for the seller to move the house?
9. Don’t get caught up in a bidding frenzy that takes you out of your budgeted range. Stay calm and logical and do you best to keep your emotions in check.
It takes some strategizing, and a great real estate agent will prove invaluable, but you can be successful in a bidding war, and come out ahead with the home you have always wanted.