How to Win a Bidding War on Your Next Minnesota Home This Summer
The Minneapolis housing market is heating up for the summer. Pending sales this spring were the highest since 2005. Buyers this summer will likely face some stiff competition.
Being involved in a bidding war can be stressful, so relieve some of the pressure by being prepared. With an experienced Realtor® on your side and a bit of commonsense and competitive spirit, you can win a bidding war on your dream home without overpaying.
Keep Your Emotions Out of the Bidding War Process
It can be easy to get emotionally tied up in a bidding war. Chances are you’ve already fallen in love with the home and can already imagine your family living there. But it is important to keep these emotions in check during the purchase process. If you let them run wild, you may overpay for the property and end up with some buyer’s remorse.
Know Your Limits
When you’re in a bidding war, it’s important to make a strong offer. But don’t submit an offer that makes you uncomfortable financially or is far over market value for the home. To stay within your financial limits, you have two choices. Submit your strongest offer first, knowing you must walk away if you are outbid. Or, with an attorney, you can look at adding an escalation clause to your offer. This clause outlines the increments at which you would like to outbid other offers and a cap on how high your outbidding should go.
On the other end of the spectrum, don’t lowball a seller when you’re in a bidding war. It’s likely your offer will be rejected outright. Instead, offer a strong number that stays within your limits. Try adding a number other than zero to the end of your offer. This will make the number stand out from other offers that end in round numbers.
Sweeten the Pot
A strong offer involves more than just a good number. Offering other perks may help sellers choose your offer over others. Cash-only offers are especially appealing to sellers. But a cash offer may not be possible for you. Instead, add a pre-approval letter to your offer showing you’ve secured financing. Offer more earnest money to show how serious you are. Be willing to agree to the seller’s closing date or pay your own closing costs.
Submit a Clean Offer
Presentation counts in a bidding war. Know the deadline for submitting offers and adhere to it. Submit your offer in the format the seller wants and include all of your contingencies. Consider adding a cover letter to your offer to share a little bit about yourself and why you want the property. Tugging at the seller’s heartstrings may work in your favor. Remember, these are people who often have strong emotional ties to a home it isn’t all about money. Another risky but available option is to remove an inspection contingency, this is only advisable in specific cases where you are confident about the condition of the home and or the buyer’s ability to handle any potential issues. In MN this is a big help to an offer because the seller can make a non-contingent offer on another home right away.
Playing your cards right in a bidding war can be difficult. To increase your chances of winning, work with a reputable, experienced Realtor®. Contact Brooks Johnson, your friend in real estate, today.