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6 Tips For Winning A Bidding War

A bidding war can be a big obstacle between you and your dream home. Here's how to come out on top.

Finding your dream home can be a lot of fun, but it's also serious business. If you've ever found yourself in a heated bidding war with another prospective buyer, then you know exactly why.

As stressful as a bidding war can be, there are plenty of ways you can turn the tables in your favor. So if you're locked in a desperate tug-of-war with another buyer, take a deep breath and use these tips to make sure you come out on top without overspending.

Know What You Can Really Afford
It's important to know the absolute maximum price that you can pay, factoring in monthly mortgage payments, property taxes, homeowners insurance, maintenance, and any other expenses, such as possible homeowner association or condominium fees. Knowing your maximum will prevent you from going too high if you find yourself in a bidding war; and if you do end up losing out to another buyer, at least you'll know that you made the best offer you could.
Find the Right House for Your Budget
Look for homes that are priced slightly below your maximum budget, and make a substantial offer — this isn't the time to try to lowball the seller. If there is another bid and the price starts to inch its way up, knowing that your maximum budget is a bit higher than the asking price gives you some wiggle room.
Make Sure You're Pre-Approved
Being pre-approved for a home loan not only gives you a more solid picture of what you can afford but also lets sellers know that you are serious about buying. Pre-approval might not give you a leg up over a buyer who is willing to pay way more than you, but if a bidding war is at a dead heat, a buyer with pre-approval has a significant advantage over one who does not.
Put Cash on the Table
If your finances allow it, one of the best ways to gain an advantage over other buyers is to increase your upfront cash payment. Sellers always prefer to get cash rather than waiting to see if the buyer's mortgage comes through, so the more you're able to pay upfront — even making an all-cash offer, if possible — the more likely it is that your offer will be accepted.
Skip the Contingencies
Buyers and sellers each come to the table with any number of contingencies. The seller may need to close on their new house before selling their old one, or you may need to move in on a specific date. If you're not the only potential buyer, it helps to be flexible about contingencies and accept as many of the seller's as possible.
Make a Personal Connection
It's possible to win a bidding war you never thought you would win by making a personal connection with the seller. The key is that it has to be genuine; ingratiating yourself to the seller in a transparent attempt to get ahead will not do you any favors. But you should attempt to get to know the people who are selling the house and write a personal note to the seller about the future you envision for yourself in your new home.

Still unsure about how to navigate a bidding war? Your experienced real estate agent will be able to help you make the best decision and come out on top.

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6 Tips For Winning A Bidding War

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