Bidding wars are not uncommon any more. Here in New Orleans, we are currently in a seller’s market, and houses are flying off the market as soon as they go up. How do you win a bidding war so you can secure your home?
The first thing to know is that in a bidding war, you have to bring your highest and BEST offer. Many offers have been chosen that didn’t the highest sales price.
How so? Because they made all the other components that much more desirable. We won’t tell you all our strategies to win, but we will give you some tried and true methods we use.
Bidding War Strategy #1: Reduce your inspection period time
The standard time people ask for doing inspections is 12-14 days. We even see some people ask for 15 days. If you don’t go through with the house, and it’s a hot property, the seller has now left the house off the market for two weeks. And guess what? They don’t want to do that.
One way to win a bidding war is to go in with a much shorter inspection period. Your real estate agent should be able to call their favorite home inspector and ask to be squeezed into their schedule. Our advice is to ask for 7-8 days at most. This way, the seller knows this will be over with ASAP.
Bidding War Strategy #2: Have your financing together
During a bidding war, this is the time to settle on your lender and have all your documents in their hands. You want your lender to be able to say, “this is a good file.”
If you’re working with some fly by night company or one that is less than reputable, the listing agent knows and is less likely to take your offer.
Editor’s Note: We keep lists of the lenders who have dropped the ball and couldn’t get people to a closing.
Bidding War Strategy #3: Closing costs
If you don’t need closing costs – don’t ask for them. Closing costs requests only make your offer messy and complicated when it comes to bidding wars.
If you need them, ask your lender to work those numbers and you only ask for what you absolutely need. Also, when closing costs come on the table, you usually need to go higher in price. (This means above the listed price for sale)
Bidding War Strategy #4: Deposit Amount
If you love this house, like really love it – one of our favorite things to do is it make half your deposit non-refundable after inspections. This way, if your financing falls through after inspections, they are still guaranteed some of your deposit money. You’re now showing that you’re serious about the house and want to make things work.
NOTE: Your deposit is always refundable to you after the due diligence period if your financing falls through. It is not refundable if you decide to cancel for any other reason.
Bidding War Strategy #5: Escalation Clause
We are not fans of this at all. It muddies the water when it comes down to an offer. What is an escalation clause? It says you will go up to X amount of dollars over the highest bid, up to X amount. (For example, you will go $2500 over another offer up to $300k)
Don’t do this. Just make the offer at the highest number you’re comfortable with. (If you lost the house over $200, you would be ok because you know you offered the very best you could while still feeling comfortable)
Many agents don’t understand escalation clauses, and it will backfire.
Bidding War Strategy #6: Lagniappe
Don’t ask for their furniture or a home warranty. Don’t ask for unnecessary items that would make your purchase agreement unattractive.
One of the best ways on how to win a bidding war is not making your contract messy with extras. We want to go in with a fair, clean offer that will razzle-dazzle the sellers!
Sometimes, even after you’ve presented an incredible offer and do all of the above – you’re still going to lose out. Be prepared for some heartache – but we will get you YOUR house.
If you’re ready to work with some extraordinary agents, text us!