It's one of the biggest fears that prospective buyers have.... It's also becoming more and more common in many real estate markets, particularly those that have more buyers than available homes. It can turn a sure-fire deal into heartbreak at a moment’s notice. It’s the dreaded multiple-bid scenario –– a “bidding war.” Just when you think you’ve got a great deal on that dream house, a call from your real estate agent informs you that you weren’t the only one interested in the home, and you’ll now have to revisit your offer if you want to beat the other potential buyers and get the deal done. Only the seller likes this scenario, because multiple bids ensure that the final price will increase or the offers improve in other ways.
Are you buying a home? Before you make an offer, find a mortgage lender with MortgageBite’s Free lender comparison platform.
So what do you need to know before you get into this situation? How can you prepare to win now, and avoid the roller-coaster feeling of being shaped by events instead of directing them? Forbes has a great primer on how to prepare yourself, and it’s a must-read in particular if you are looking to buy in a competitive market. The great advice includes a number of ways to improve your offer, and some issues to avoid, if possible.
The first step to winning a bidding war is knowing what the seller and their agent will look at to choose an offer. Here's what you should consider if you want to win a bidding war on a home:
Down payment amount
Simply put, the higher the better! A seller will look much more favorably on a 20% down payment (or more) than they will a bare minimum amount. The higher down payment sends the message that the deal (between buyer and their lender) is much more firm, and there is a lower chance that you’ll withdraw your offer.
Type of home loan
While FHA and VA loans are great products that help many borrowers, they are much more complicated loans that often involve borrowers with lower down payments and credit scores. If more conventional lending programs are available to you, it might be worth considering one of those loans to improve the appeal of your offer.
Contingencies and waivers
One major red flag in an offer is a contingency. If you are buying the home contingent on selling your home, just know that will weaken your offer compared to offers without a contingency. Additionally, you can gain an edge by offering to waive issues like home inspections (think “as is”) and appraisals (if the appraisal comes back for less than the purchase price, you’ll cover the difference).
Want more information? Check out the original article 'Mortgage Strategies For The Multiple Bid Wars' on Forbes.
Ready to apply for your mortgage? Try MortgageBite’s Free rate comparison platform today and get the best deal.