How to Navigate a Bidding War

You have been looking around at different homes on the market and have finally found it - the home of your dreams. The problem is that another couple also have their eyes on the same home and seem to want it as much as you do. The bidding war begins for the real estate and you don't know what to do next. Here are a few tips to help you get through it.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Submit A Clean Offer

Although it may seem surprising, it's not always the price that determines the winner in a bidding war. A clean offer will sometimes beat out a higher offer. A clean offer refers to the agreement terms. If you have a preapproval for mortgage or can pay for the house with cash, for example, this would be part of a clean offer. Other things that can keep an offer clean include having the closing date work with the seller's, the purchase is not contingent upon you selling your home, you don't ask for anything extra like unusual repairs or appliances thrown into the offer etc. A clean offer can often be very appealing to the seller even if you are offering less money than another that has come in.

Remain Flexible

Let the seller know that you may be flexible on such things as purchasing the home as is or working with a new closing date. If the seller has to sell his home quickly for one reason or another you may win out on the bidding war just by moving the closing date forward to accommodate his needs.

Don't hold back on the deposit that you're willing to put down on the property. It shows that you are serious and really want the home. If you end up getting the property it will be put towards your down payment and if you don't win out on the bidding war you'll get the money back anyway. It's a win-win situation that just shows the seller that you are extremely interested in that house and willing to step forward and show it by offering a large deposit.

It's Not All About Business

Take a step back from the logical side of purchasing a home and put some emotion into it. Take a few minutes to write down what the house would actually mean to you so that the seller can understand why you really want their home so badly. In most cases the seller will have a very deep emotional attachment to their home and it will mean a lot to them to know that it is going to people that will love it as well. In many cases you can touch the heart of the seller as long as you are being sincere with your words.

Protect Your Investment

In order to keep yourself protected, you should make sure that you get a house inspection before putting in an offer. This is especially true for luxury homes. Although it may cost you a bit for these inspections, it's definitely a worthwhile investment.

Many people have purchased a home only to find out later that the house came with major problems. The main issues that the inspector will be looking for include problems with water penetration, the roof, furnace, and wiring. The inspector also needs to look for possible structural problems that can show in the form of doors that can't close properly, floors that slope and cracks in the walls.

To further protect the amount that you end up paying for a home you may want to consider dropping out of a bidding war when there are more than 5 active bidders fighting for the house. In this type of scenario, you may be dealing with irrational bidders that are willing to fight tooth and nail to get the home they want. It can be tough to pull out of a bidding war but sometimes you simply need to know when to fold up and when to walk away.

Prepare in Advance for the Stress of a Bidding War

Things can get quite crazy when a bidding war is going on and it is easy to lose perspective of what is really important. You need to be prepared ahead of time and have an exact maximum amount in mind of what you're willing to spend - no matter what! This way, you won't be shaking your head when you find out that you are the winning bidder and questioning why you went so far when you really couldn't afford to pay such a high amount.

Sometimes it's not all about the money and many bidding wars are won by people that bid less but put an extra effort into their offer in another way that counts.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.