Finding out that your offer is one of many can certainly feel intimidating, especially if you’re buying your first home. Bidding wars occur the most frequently in a “seller’s market,” or one in which the number of buyers outweighs the amount of homes currently for sale. And, although this may sound surprising, the secret to winning a bidding war doesn’t require overpaying for the home. In fact, it’s actually pretty unlikely you’ll find yourself competing against buyers willing to overpay— keep in mind, mortgage lenders
require an appraisal to ensure the loan amount does not exceed the property’s value. In other words, a buyer who plans to take out a mortgage simply does not have the option to overpay for a home. Conversely, cash buyers typically aren’t inclined to pay more than market value for a property. With that said, unless your offer is significantly below asking price, your chances of winning a bidding war are already better than you might expect. So, before you decide that it’s time to increase your bid or walk away, talk to your Realtor, and consider the following strategies:
How To Create An Attractive Offer Without Overpaying
1. Get Pre-Approved For A Mortgage
If you know you won’t be making an all-cash offer, then the best time to get pre-approved for a mortgage is actually before
you begin house hunting. Although you may already know roughly how much you’re willing to spend on a home, getting pre-approved is the most accurate way to figure out a realistic budget—and sellers are well aware of that fact. Until you’ve been pre-approved for a loan, the seller has yet to see proof you’re able to come through on your offer; if you have been pre-approved, however, that lets the seller know you’re serious and proves you can likely afford the purchase.
2. Avoid Including Too Many Contingencies
Of course, the objective is never to put yourself in a vulnerable position— your offer should absolutely be contingent on your being approved for a mortgage and
on a home inspection that indicates the property is safe for occupancy. Depending on the property in question, you may even be inclined to include additional contingencies in your offer, but just be mindful of how the seller may react. Too many stipulations can quickly become off-putting or insult the seller, and ultimately, it’s his or her decision as to whose offer will be accepted. When in doubt, always consult with your Realtor
for advice about how to best structure your offer.
3. Write A Personal Letter To The Seller
Believe it or not, a persuasive, concise, and eloquently-written letter can go a long way in the homebuying process. Aside from helping you stand out from buyers who’ve submitted competing offers, a handwritten letter is a great way to connect on a personal level with the seller, thereby increasing the chances of your offer being accepted. Talk to your Realtor about how you would like to structure your letter
, and don’t be shy about asking him or her to read it over for you before sharing it with the seller.
Contact The Guerra Group To Find Your Dream Home Today!
Thinking about buying a home in the Houston area? Make sure you check out our free, downloadable Buyers Guide
for even more helpful tips, and don’t forget to get in touch with us today for assistance with your homebuying journey!