The spring market is in full swing! Competition for homes, especially updated homes in the $500,000 and under price point, has spread to Northern Virginia’s suburban markets. With an increase in competition, you may find yourself in an unexpected bidding war. Here are 9 winning tips:
9 Tips for Winning An Offer Bidding War
- Be approved with a local lender who can get on the phone and back up your qualification. Out of town and online lenders with weak lender letters will make your offer unnecessarily weak. Local lenders can also settle quick - a bonus for many sellers.
- If you are confident in your financing, consider dropping the financing contingency. The financing contingency only protects you if your lender rejects your financing. If you are confident your loan will not get rejected, this contingency can make your offer unnecessarily weak. Ask your loan officer to have underwriting review your file or issue you an approval prior to making an offer.
- Increase your Earnest Money Deposit. A large deposit shows the seller you are serious and are financially stable. It’s important to remember that you risk losing your deposit if you default.
- Consider a General Home Inspection Contingency which would give you the right to inspect and cancel but without the right to negotiate repairs. From the seller's perspective they won't be "nickeled and dimed" over minor issues that may come up and you reserve the right to cancel for any reason.
- Pre-Inspection: Have an inspection before a seller set offer deadline should there be one. Pre-inspections are often pared down versions where you might not get a written report. If time permits, having a full inspection.
- The Appraisal Contingency is often the riskiest contingency for a seller, so having a shorter or no contingency is a huge tool in winning multiple offer scenarios. You can have a partial contingency as well. *For example, if the sales price is $600,000, you can stipulate the home must appraise for at least $580,000. If the home appraises for anything between $580-600k, you would proceed with the contract and pay the difference.
- Offer Over Asking: If you find a home that just hit the market and you want to prevent the home from being shown to other buyers and/or have the open house cancelled, you may want to consider putting your best foot forward in the beginning - coming in at full asking may not be enough. In this case, consider making a higher than asking offer and giving the sellers a deadline to respond.
- Escalation Clause: An escalation clause can be a valuable tool. Your offer would say “I will pay "x" (starting offer) price for this home, but if the seller receives another offer that’s higher than mine, I’m willing to pay "y" (escalator factor) more, up to "z"" (Escalator Ceiling)"
- An Escalation Clause contains an escalating factor, which is how much you are willing to pay over the next best offer. and an escalator ceiling, which caps the top price you are willing to pay for the home.
- The escalation also contains an option to retain or waive the appraisal contingency. *Note: If your escalation clause is exercised by the seller, they must provide proof the other offer was valid.
- Write a letter to the seller. Our letters to sellers end with a proposition to the seller that includes a counter if you are not the best offer. Include a picture as well if you can.
Sometimes it just comes down to price, but often times the seller wants to accept a contract from the party who will most likely close without delay and drama. This is a combination of demonstrating you are well qualified and working with an agent with a track record of closing deals. Let us know if you have any questions!
Elizabeth brings more than 15 years in corporate America and nearly ten years in real estate to her role at Glass House. She is a renowned and respected industry authority in real estate marketing. She is hard working, persistent, enthusiastic and service oriented with a focus on helping successfully guide her clients to achieve and exceed their real estate goals.