What You Need to Know About a Bidding War

There is a low inventory of homes to buy right now and the competition for homes can be fierce.  If you are looking to purchase a home, chances are you may find yourself in a BIDDING WAR. Be prepared!  Here are six ways to come out on top in a bidding war:

1. Get your finances in order and get as much cash as you can.  It is never too soon to get pre-approved for a loan. In fact, the sooner the better. Sellers will have lots of options and will be leery of those who do not have loans set in stone. If possible, bring cash to the table. Sellers will fear appraisals coming in low and loans falling through, so be prepared to cover the difference with cash.
   
   
2. Don’t hesitate! Be the first to make an offer, and make it a good one. An insulting offer will put you at the bottom of the seller’s list, so it is not a good time to low ball. Come in at or slightly below asking price so that they know you are serious about purchasing their home.
   
   
   
3. Escalation Clause.  This is the amount of money the buyer agrees to increase the offer if there are other bids. If you offer the asking price of $400,000 on a house, but it might sell for $450,000, put in an escalation clause stating that you are willing to go as high as $460,000. But know your limit. Don’t offer more than you can handle. Also, make sure the clause states that the seller can only take the winning bid up to a level just above the competing offers. For example, if an offer comes in for $430,000, your bid would be upped to $431,000.
   
   
4. Get a pre-inspection. It will cost you a few hundred dollars, but it can help you in a super-tight market. If you can make a bid that is not contingent upon inspection, sellers will look favorably on your offer versus the same offer from someone who has a contingency in their contract.
   
   
5. Think with your head, not your heart. BE SMART! Purchasing a home is an emotional decision, but emotions can get in the way of making wise decisions.  Make sure you have done thorough research of the market: look at the most recent comparable sales, compare prices from a year ago, visit local schools, have coffee at the closest café and speak to potential neighbors. Look at listings nearby. Whatever you do, don’t overpay because you get caught up in the heat of the competition. While the house may seem perfect for you, it is not the only house that will be perfect for you. So, keep a level head and MAKE INTELLIGENT DECISIONS.
   
   
6. Finally, and most importantly, HIRE AN EXPERIENCED, PROFESSIONAL REALTOR to guide you through the process. The benefits of having a Realtor are priceless because they are experts in negotiating multiple offers, and now more than ever, you need that expertise on your side!

​If you are in the market to buy or sell a home (or both), let Sandra Nickel and her Hat Team of Professionals assist you with all your real estate needs! Call them today at 334-834-1500 and check out https://www.homesforsaleinmontgomeryalabama.com for more information!

Photo Credits: dsnews.com, forbes.com