How To Win In A Bidding War When Buying A House
So, if you've heard anything about the real estate market in 2021, it's probably that there's very little supply of homes for sale, and that a lot of homes are getting multiple offers in a very short period of time. Well in this video, we're gonna go over our tips on how to get your offer accepted in a multiple offer bidding war situation without always necessarily being the highest price. And stay tuned to the very end where we go over one popular thing that realtors used to do that's getting to be illegal.
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So tip number one is to figure out your financing ahead of time. If you're buying cash, you have to have a bank statement showing that you have all the cash that you need in your account with your name on it. You can always cross out the account number, but make sure that that's ready. You don't wanna have to be scrambling for that when we're trying to write an offer.
If you're getting financing, if you're getting a mortgage, make sure you're fully pre-approved upfront, not just pre qualified, but fully pre-approved. The reason this is so important, sellers wanna make sure that that deal is gonna close. If they're getting four or five, six offers, they don't wanna take a risk that your deal is not gonna close. A pre-qualification just isn't gonna cut it. These big banks, a lot of them are only giving pre-qualifications. You wanna make sure that your mortgage lender does a full pre-approval and they're taking you all the way through underwriting upfront so you can write a really strong offer.
One of the terms in the contract that you want to try to shorten as short as possible is your loan approval period. So if you're fully underwritten upfront, you can write a deal that's basically as good as cash with a five to seven day loan approval period that gives you time to do an appraisal and make sure the home is that the correct value. And it gives the lender a few days to do whatever else they might need to do. But your offer is gonna be much, much stronger. If you have a very short loan approval period versus having a 30 or 45 day period for you to get approved for your mortgage, your offer will stand out.
Tip number two is to know what you're looking for and where you're looking for. It's extremely important to know what it is you want, where you wanna be. I would have a needs list written out: We have to be in a certain school district, or we have to be in a certain city, we have to have this number of bedrooms, this number of bathrooms, square footage...whatever all the must haves are, make sure we know that upfront. It's almost impossible to be looking for a home, you know, from four different cities. You really have to hone in and narrow down what it is you're looking for. So when it hits the market, you know that this is what you're looking for and you can jump on it. In this market we don't have a couple of days to figure out is this the right property or not. The good homes are selling in a day or two. So you gotta be able to write the offer quick. But don't worry, you always have your inspection period for you to back out and change your mind for any reason whatsoever. So don't be scared to write an offer if you think it's the right house.
Tip number three is to have a home inspector lined up who can do an inspection within two to three days of getting your offer accepted. The way the inspection period clause reads in the contract is the buyer can back out for any reason whatsoever during the inspection period. So as a seller, you want that period to be as short as possible because you don't wanna take the home off the market for 10 days, 15 days, just to find out that the buyer is going to back out of the deal. So have an inspector lined up, ready to go. If you need a good recommendation for inspectors, reach out to us. We have more than one who we work with, who we can highly recommend to make sure we can get someone out there within a day or two. Being able to write a very short inspection period into the contract is gonna make your offer look much more appealing compared to someone who wants two weeks to figure out when they can do an inspection.
Tip number four is to know the values in the neighborhood that you're looking for. Sometimes in this market, you really do have to be the highest bidder and dollars and cents is sometimes what the seller is looking for. So if you have to be the highest bidder you have to be prepared to do that. Sometimes homes are selling five, 10, 15, 20, sometimes even more thousand dollars above the asking price, depending on the price range. So one of the things that we recommend is if you're approved for let's call it $500,000, maybe you look for homes around the $475,000 mark. So that way, if you have to increase your offer, if you have to go above the list price, you're not overextending yourself and going above where you're comfortable spending every month. So make sure you know exactly what the values are and how much you're comfortable spending every month.
Tip number five is timing. You have to be able to know how quickly do we have to get in this house? Is the seller making a decision and going with the first offers that they get, or are they taking it through the weekend and trying to get multiple offers? Do you have a day or two to get in there or do you have to call your realtor and maybe be the first person in there, or have them give you a video tour if you can't make it that day. Figure out what the seller is looking for as far as timing, but you really don't have a lot of time to figure that out for the sellers that wanna make a decision, you know, on day one or day two. You have to be one of the quickest people in there. So make sure you're paying attention to the listings that you're seeing and make sure you're getting out there as soon as possible.
So tip number six are buyer love letters. So these actually are no longer allowed. There've been a lot of courts that have ruled that this is gonna set people up for fair housing violations when you're buying or selling real estate. People are not allowed legally to make a decision on who to sell or buy a house from based on familial status, age, demographics, gender, things like that. So a lot of realtors used to encourage their clients to write offers, and I'm guilty of it too, of saying, "Hey Mr. Seller, you know, we can picture our kids growing up in this house, just like you raised your kids in this house. We can picture Christmas morning here and blah, blah, blah." Those kinds of things can set yourself up for a fair housing lawsuit. So we as realtors are no longer allowed to do that. So sometimes you just gotta make sure that the offer is the best price and terms that you can meet, that you can actually offer to the sellers.
So follow these tips and hopefully you can get your offer accepted in this very competitive market.