Home > Blogs > Marianne Bandy > Parker CO Homes & Real Estate Blog

How to Win a Bidding War in the Denver Housing Market

By Marianne Bandy

Real Estate Agent with Bandy Homes

September 08, 2016 11:53 AM

Trying to buy a Denver home these days can be brutally competitive, especially if you’re looking at homes priced under $400,000. Even though the supply of houses is increasing, demand is still high, and you may find yourself in a bidding war, with multiple offers pushing prices ever higher. So how do you emerge the winner in a bidding battle? Learn these strategies for winning your next bidding war so you come out on top.

Offer full asking price or more so the seller knows you are serious. This is not the time to lowball, not with the low amount of listings out there. Nothing turns a seller off more than someone undervaluing their prized possession.
Put an escalation clause in your offer. This is an amount of money the buyer agrees to increase his/her offer, if there are other bids. So let's say the purchase price of the home is $400,000, but you expect it could go as high as $450,000. Put in an escalation clause saying you are willing to go as high as $460,000 (if you are). Make sure, however, that the clause also says the seller can only take the winning bid up to a level just above competing offers. In other words, if your competitors only go as high as $430,000, the seller can't expect you to pay $460,000, only, say, $431,000.
Eliminate seller paid closing costs/points. It is not a full price offer if you ask the seller to pay your closing costs. If you need to get closing costs covered, make sure your offer Nets the seller at least what a full price offer would.
Large earnest money up front. Show the seller you are committed and putting up risk to stand by your “word” (purchase agreement) to buy the home.
Cash is King. Go in with a cash offer if possible to eliminate problems of appraisals and financing. Appraisals can be a problem as prices are increasing. New regulations make it difficult for appraisers and banks to meet the market changes.
Closing date should match seller's preferred date. Buyer’s agent should try to find out what date the seller would like to close on.
Allow the seller a couple of extra days possession after the closing. This gives them additional time to move out and lowers their stress.
If the buyer is obtaining financing, include a statement that the buyer will make up the price difference in cash, up to a preset amount, if the home doesn't appraise for the purchase price. This will also relieve the concern of an appraisal problem.
If the buyer is doing an inspection, have the buyer provide a statement that they will not try to re-negotiate price on any small items, but only structural or mechanical failures. Inspections were intended to be a way for the buyer to make sure they were not purchasing a major problem. Too often now this is being used as a way to re-negotiate the price with the seller. Remove this potential concern for the seller.
Get preapproved for a loan. Now. Today's mortgage market is still relatively tight, and home sellers are leery of loans that might not be set in stone. If you can, bring cash to the table. Submit a well-prepared Pre-Approval letter from the lender with your offer. Make sure it does not come across as a preliminary pre-qualification letter.
Show the love! If you love, love the house, then let the seller know that, either directly or through your real estate agent. Don't be afraid to write a letter, with a picture of your family and be specific about why you love the house.
Last but not least, be smart, not sappy. Buying a home is one of the most emotional things you will ever do. Don't let your emotions steal your wallet. Don't overpay because you get all wrapped up in the heat of the competition. It doesn’t matter what house you're looking at, it's not the only house you can ever be happy in.