How To Avoid Getting Into a Bidding War When Buying a Home
A bidding war can really take you off course when you’re buying a new home, or trying to buy one. Not only can it frustrate you, it can also end up turning into a situation where you’re going to be on the losing end. It’s best to avoid such a situation if you can help it. The only thing that such a contest ends up accomplishing is driving up the final selling price of the home, which is to your disadvantage. Only the person selling the home is going to be happy in this scenario! Here are some strategies to help you avoid getting into such a war when purchasing a home.
Look For a Quick and Personalized Offer
To avoid escalating a situation into a bidding contest, make sure that you focus on providing the seller with a quick and personalized offer. To successfully compete against other purchasers, see to it that you look at a home the very day that it actually goes on the market. Ideally, your agent ought to speak with the listing agent to figure out what’s driving the seller and what he needs. Perhaps they’re looking for a quick settlement, or even post-settlement rent back. You’re encouraged to be highly flexible and include that in your offer. All this is part of making a quick and personalized offer to keep yourself away from a bidding contest.
Lessen Or Get Rid of Contingencies
To avoid a bidding war, you’ll want to make your offer more attractive than most. One important way to accomplish this is by removing any contingencies about appraisal, financing, and home inspections from your offer. If you’ve got sufficient cash reserves to take care of the gap between your offer and a low appraisal, then you should just waive the appraisal contingency. However, be certain to leave the financing contingency in place for your own protection. If it just isn’t possible to waive any of these, you could at the very least lessen the time frame. For instance, you can lessen the loan contingency to just 10 days.
Use an Escalation Clause
An escalation clause is simply an addendum to a buy offer. It is characterized by an authorization to your agent that he can present a specific amount over the best offer that the seller may get. It sends a strong message to any other potential bidders out there who may have their eyes on the same property you’re interested in. As such, it could well have a discouraging effect on other buyers making their offers, thereby helping you steer clear of an annoying bidding contest.
These are just some of the most effective strategies you have at your disposal when you want to avoid a bidding war – and you should! Getting into a bidding contest with anyone else just works out to the favor of the seller, not to yours. By personalizing an offer in a quick fashion, getting rid of some contingencies and even relying on an escalation clause if possible, you could get what you want more efficiently.