Over half of all homebuyers in many markets are competing with multiple offers and facing bidding wars when they place an offer on a house. Here are three strategies you may want to consider if you’re serious about winning a bidding war.
1: Offer More Than the List Price
In this case, be sure to get approved for a low-down-payment loan in case you need to bid above the asking price and the appraised value doesn’t match up. For example, if a home sells for $700k and it only appraises for $650k, you’ll need to make up the $50k difference yourself or get approved for a higher “Loan-to-Value” loan (low down payment) because the lender will only use the lesser of the purchase price or the appraised value.
2: Waive Some Contingencies
A “contingency” is a condition that you add to the purchase agreement. If you were the seller, would you rather accept an offer that’s full of contingencies, or an offer with fewer contingencies? Better yet, you may even consider sweetening the deal for the seller by giving them a set amount of time after closing to comfortably move out.
3: Pay Cash
This only works if you have the cash, or if you could get it temporarily from a relative. Keep in mind that you only have 90 days after closing to place a mortgage on a property that you bought with cash if you want to secure your tax deduction. In order to get that loan approval after closing, you’ll need to document the source of funds that you used for your cash purchase. Contact us for more details so that you can avoid problems down the road.
