Winning the Bidding Wars
Hot Real Estate Markets bring out the worst in everyone. Vendors become greedy and demanding. Buyers become desperate and frustrated. And real estate agents get caught in the middle as they try to negotiate offers that are acceptable to both sides of the transaction.
Hot markets usually mean multiple offers will be received for just about every home for sale. How can you buy the home of your dreams when several other people are also bidding on it? Here are five tips:
Make your best offer. Reality is, the bottom line is the most important thing for most vendors. They're looking to sell their home for the highest possible price. If you want to win a bidding war, offering the highest price - something attractively above the asking amount - is a sure way to get the vendor's attention. Most vendors who receive multiple offers only seriously consider those at the top of the price heap.
Cover the vendor's costs. Of course, price is only part of the equation when it comes to the vendor's net proceeds from the sale. An offer with a slightly lower price can win if the buyer agrees to incur some of the vendor's costs. For example, assuming the vendor's existing mortgage can eliminate discharge penalty costs for the vendor.
Show you're serious. Offer to make a large deposit and as large a down payment as you can. Putting more money on the table up-front shows the seller you're serious about the transaction and willing to put your money behind your intentions.
Get pre-approved. Submit a copy of your mortgage pre-approval with your offer. A pre-qualification letter is helpful, but a full approval, subject only to an appraisal of the property, is even better. Vendors favor buyers who demonstrate that they're financially able to close the transaction. Get your pre-approval letter from a local mortgage broker who has a good reputation among the local agents.
Don't add unusual or unnecessary conditions or requests to your offer. Vendors know extra conditions (e.g., the approval of in-laws, the sale of another residence) can delay the transaction or create a loophole for the buyer to bow out of the agreement. Special requests (e.g., including appliances if they have been excluded in the listing) complicate the offer and distract both sides from more important elements. On the other hand, don't waive standard inspection and financing conditions unless you thoroughly understand the risks.