How to Win in Bidding Wars

In today’s market, as a home buyer, it is tough to get an offer accepted with all the multiple offers that are submitted on homes due to the lack of inventory that currently is plaguing the market. There are some things that can be done as easy options for getting an offer accepted, and now this will give you some other tools in your tool-belt to capture that home you really want!

For the people that are first time home buyers, this is great information because at times the agent you are working with may not give you all this information. It maybe because the agent is a very busy agent or many other tasks on the agent’s plate that can create them to not inform you of these things. The best thing to do is to do your own research and make sure that you are well educated while buying a home.

For the tips that should be covered when submitting an offer, there are these items that can really help you win a bidding war.

1. 1. Increase your EMD (earnest money deposit): You should raise your normal EMD from the classic 1% of the purchase price to a higher price. This is skin in the game, or commitment to getting the home, and showing this confidence to the owner. Some clients have won a bid for offering $50,000 EMD verse the $10,000 as all other offers did in the bid. The other option if you are an investor, I have seen them submitting an offer for the EMD being the full asking price for the home, and the investor won the offer due to that move.
2. 2. Shorten the Escrow Period: This is another good tactic that can secure you the win over other offers if you offer to close in 15 days or maybe in 20 days. It helps the seller know that you can close, and they get paid as soon as the sale happens. Now that the offer is submitted, that short window is not an option for everyone and can capture the seller’s attention.
3. 3. Reduce the Contingency Periods: A way to make the offer clean and give confidence to the seller and listing agent is drop the contingency periods to a lot shorter than the standard default days in the agreement.
4. 4. Financing: This is the biggest difference in people looking at homes as a first-time home buyer at 3.5% FHA and they could easily change that to a 5% down conventional offer that looks stronger than a FHA offer due to the heavier restrictions verse a conventional offer. This would-be biggest help, and anything that gets a buyer closer to 20% gives the option to cover any difference in the appraisal verse offer price which is the second option.
5. 5. Taking Off Contingencies: The biggest help that cash offers provide is the ability to not need loan approval to close, and not need an appraisal. These two are the biggest issues that I see in any hesitation on offers from the listing side of the table. Loans can fall out the easiest, and the appraisal could come in $50,000 in difference, so it really is great to have an option to at least take off appraisal contingencies and even the loan contingencies as long as you have an inspection contingency left in the agreement. If the inspection is left in there, then you are able to pull out because of any reason. Keep the inspection and take the rest out of those contingencies which would make your offer basically a cash offer.

You need to have the strongest offer to get it accepted, and the way that you get it accepted is that you pull out all the stops with your agent that is representing you. Obviously, a lot that will win it is highest price and best terms, there is a lot of success from creating those offers to make the bid go in your favor while keeping your money safe if the deal becomes too risky once in escrow. This is not a message to tie properties up for no reason or having no ambition to close the escrow. You need to be serious and these tips are for the people willing to win a bid and close on a house.