Whether you are a renter looking for your first home, a recent retiree in search of a simpler life or a hard worker seeking your dream home, the real estate market can be an intimidating place. When the market is depressed an dhome prices are falling, buyers with cash to spend can take their pick, butwhen the market grows stronger and homes become harder to find, the level of competition can really ramp up.
If you are bidding in a competitive real estate market, you need to make your offer stand out, and that means getting the attention of the seller. In aseller's market, multiple bids are commonplace, and buyers need to pull out all the stops to get their own bids accepted. Here are some strategies home buyers can use to up their odds of entering a winning bid.
Know the Local Market:
At the end of the day, all real estate is local, and the nature of the local marketplace will play a big role in your ability to land a deal. Before you can put in a winning bid, you need to carefully research the local rea lestate market. A strong market will make shopping more difficult, but you can still get a great deal if you know where to look. A weaker local market in the next neighborhood over will obviously make it easier to put in a winning bid,but that weakness could also make it harder to turn a profit down the line. Either way, the more you know, the easier it will be to write and submit thatwinning bid.
Get Pre-Approved for Your Mortgage:
If there are multiple bids on the same property, the seller is likely to favor the ones that come with guaranteed financing. If you are bidding in a competitive market, at minimum you’ll need to get a pre-qualification for a mortgage before you start shopping as it is usually required by the seller in order to submit an offer.
By working with a trusted lender and providing the documentation they will need for underwriting before even landing a contract, you can get pre-approved as opposed to just pre-qualified. Having those pre-approval documents in hand will give sellers peace of mind that your offer will end up at the closing table, and that simple advantage could move your offer to the top of the pile.
A winning bid does not always include the highest sales price. Different sellers have different motivations. This means that being flexible with the terms of the contract could put you over the top. Examples include agreeing to a shorter due diligence period, being able to close quickly, offering a higher amount of earnest money, or even renting the home back to the sellers for a few weeks after closing to afford them time to move to their next home.
Work with your real estate agent to learn what those seller motivations are so you can craft a bid with terms that turn that offer into a binding contract.
Pay Attention to Time on Market:
The longer a particular property has been on the market, the more likely the seller is to take a lower bid. If you have limited cash to spend and are looking for a bargain, focusing on time on market could be a winning strategy.
You will need to evaluate the property carefully, of course. There could be a reason why the home has languished on the market while properties around it have been selling like hotcakes. Even so, that inventory of unsold homes could be obscuring a hidden gem, and finding that jewel could be your ticket to affordable home ownership.
It is not easy to put in a winning bid, especially in a seller's market. If you want to land the home of your dreams without busting your budget, you need to shop smart and use some strategy. The tips listed above can help you win the bidding war, so you can trade in your box of rent checks for a home of your own and a mortgage you can afford to pay.