According to a recent industry survey, less than 2% of real estate agents have not yet been involved in a bidding war this year. This means that you will most likely compete with multiple offers if you’re in the market to buy a house this spring or summer. Here are two strategies you may want to consider if you’re serious about winning a bidding war:
1 – Offer More Than the List Price
Money talks. Imagine if someone offered you an extra $5,000 or $10,000 for something you’re trying to sell. It would certainly catch your attention. The question becomes, how likely is it that the buyer can actually follow-through and get you that extra money?
If you’re the buyer in this scenario, it’s crucial to get a solid mortgage approval BEFORE you place an offer on a new home. I’m not talking about a “pre-approval.” I’m talking about a full-blown credit approval where you’ve submitted your income and asset documentation to the mortgage lender ahead of time.
Note: If you offer more than the list price, you should be prepared that the appraisal may not come in at the same value as your offer. In that case, you would need to use a larger down payment or pay extra mortgage insurance to make up for the difference. Make sure your mortgage lender takes this scenario into account.
2 – Waive Some Contingencies
A “contingency” is a condition that you add to the purchase agreement. For example, the purchase agreement may be “contingent” upon your ability to obtain financing. Put yourself in the seller’s position. Would you rather accept an offer that’s full of contingencies, or an offer with less contingencies?
Note: If you waive some contingencies, be prepared for the consequences. For example, if you waive the financing contingency, how confident are you in your mortgage approval, or that you can buy the house if the mortgage financing falls through?
Contact me if you’d like to evaluate your mortgage financing options!
John Lemos, CMPS®
Office: (714) 613-1664
Cell: (951) 256-0812
Fax: (714) 844-9263
2099 S State College Blvd, # 102