Ugh, bidding wars. They can be nasty, nerve-wracking, and even heart-breaking. Nowadays, most real estate markets present buyers with huge challenges, due to high demand coupled with low housing inventory. Oftentimes, bidding wars become the rule, especially in a seller’s market.
Buyers who run into competing offers need to up their ante if they want to win the home they love. If you do not have enough cash to go above the asking price or give an all-cash offer, remember that hope is not lost. There are many ways to get creative when giving your offer. You just must analyze which strategies you can apply to find the right approach, to get the upper hand.
Here are five ways you can compete in a bidding war and land your dream home without giving an all-cash offer:
1. Craft a thoughtful offer letter.
One simple but surefire way to pull on the heartstrings of the seller is to write a personal offer letter. Remember that sellers are attached to their homes—which are often filled with memories of their children and family growing up and countless holiday celebrations. By writing a thoughtful offer letter, you can create an emotional connection to the owners.
Get ahead of the other buyers by putting a little heart and soul into it. Be genuine in expressing why you want the house and how the community is an ideal place for your family. One trick is to include photos of your family and pets. It can help the seller visualize the people they will be passing their precious nest to. However, be extra careful about the things you say in your letter because there are some things to avoid. For example, it is a terrible idea to include your plans to tear down part of the home and renovate it to your liking. You can consult your realtor and get help from a trusted friend or relative if you need help crafting your message.
2. Provide a sweet gesture.
Want a clever way to sweeten the deal and get the home you want? Make a nice gesture that the seller would surely love. No, it is not cheating. Rather, it is acknowledging the fact that selling a home is just as stressful as buying one, so you want to help the seller get through it.
During home showings, take a hint from the homeowner’s décor and displays to get an idea of what they love. Then use it to your advantage. If they are an avid sports fan, then tickets to a game they like may help. Or, if you know they love sweets or baked goods, and you are an amazing baker yourself, why not whip up a batch of cookies or pies for them? Either way, these gestures can help you establish rapport with the sellers, which in turn, can make a substantial difference in whether they will accept your offer to purchase the home.
3. Waive the mortgage contingency.
An alternative to giving an all-cash offer is waiving the mortgage contingency. The mortgage or financing contingency means the deal is contingent on your loan being approved by the lender. Waiving it is a good strategy if you are confident enough and know that securing a mortgage will not be a problem. It will assure the seller that the deal will not fall apart, and you will be approved for a loan. While it cannot completely outweigh an all-cash offer, it can be just as effective. The last thing the seller wants is a potential buyer walking away from the deal with a heartbreaking “Sorry” because they failed to secure a mortgage.
Be confident that you will secure a loan by getting a fully underwritten loan pre-approval from a lender. Also, avoid making big mortgage mistakes like opening a new credit line, increasing your debt, or changing job in the middle of the transaction.
4. Keep the inspection period short.
Waiving the home inspection can be a substantial risk especially when your biggest financial investment is at stake. So, assuage the seller of a potential hurdle by keeping the home inspection period short— a week, if possible. That way, the seller does not have to wait anxiously for an extended period before the inspection can go through.
Likewise, make sure that the contingency time periods you have stated in your initial offer remain the same in the “purchase and sale agreement,” which includes your detailed offer.
5. Determine the seller’s target closing date and give it to them.
The best way to complement the strategies mentioned above is to make your offer solid and submit it in a reasonable period. Remember that sellers have a deadline for accepting offers and want to meet their desired closing date. For some, their target close date can be a critical factor in their decision-making process. Conforming to the homeowner’s preferred deadline can help your offer stand out and land your dream home.