by Jeff Knox
on Tuesday, December 13th, 2016 at 9:37am.
Welcome to learning the best way to win that bidding war for the house you want. While written for my market, Dallas, Texas, the tips below generally apply to all areas of the country. My article will give a buyer some great hints, tips, and strategies to win a bidding war against the competition. Our mission is to give you all the tools and weapons you need to successfully compete in the bidding war process.
Recently in our area the market has been flying, as I hear it has in much of the country. Buyers are getting into bidding wars for homes almost daily. I've heard horror stories about how some buyers have missed out on ten or more homes because of the recent financial bidding wars. We, too, have lost homes for clients because the seller received a better offer.
With this article, I can make no guarantees about winning a bidding war but I can definitely give you some good ammo for your cause.
Assembling the right squad for your mission is imperative! You're most likely going into battle here. You most likely already know this. It is even likely you've already "lost" on a home. Sound familiar? You need the right General to lead you into war. The right General is the right REALTOR.
I'm going to be brutally honest here, you need a seasoned professional with some years' experience when you're going into a bidding war as a buyer. You need a General who has seen bidding wars from both sides of the lines. You need a General who has been beaten in a bidding war but, most importantly, has learned from his or her defeats and developed a solid strategy to win you the house.
You need the right War Department Treasury. The War Department Treasury in this instance is the lender. You need a lender who is available at all reasonable, retail hours to get you any financial documents or pre-approval letters for your bidding war. You need a reputable lender...a lender with a good name who sellers trust. Maybe most importantly, you need a LOCAL lender!
Big, national banks have horrible reputations for not getting loans closed on time or efficiently. Local REALTORS representing sellers know this. If a seller has multiple offers with one of the offers having a pre-approval letter from a reputable, local lender, this could very easily be the difference between taking one offer over another - with the seller choosing the offer with the local lender.
Large, national banks can be a complete headache for REALTORS and, frankly, we just don't trust them as much as the local lender where we can pick up the phone and call the lender directly. There are some great local lenders with excellent reputations and efficiency.
This is the team you need for your upcoming bidding war - an agent who acts as a strong general and a war department treasurer who is both available and reputable.
Your attack will be the contract and offer on the house. Everything in an offer is negotiable. Remember this as I give you suggestions on how to make your offer as strong as possible. I'm going to reference the Texas Real Estate Commission contract below. I am not licensed in other states, so if you are making an offer on a house in another state, please consult the appropriate professional within your state. That being said, most states' contracts are very similar so this advice could easily apply to your offer and situation as well.
When competing with other buyers in a bidding war, it is NOT the time to try and save money. If you are trying to save money and cut corners, you need to skip a home where there is going to be a bidding war.
Let's now get into the contract and how to put together the strongest possible offer to win this bidding war!
If there is a bidding war, you will not win it with a contingent offer.
In a bidding war, most potential buyers will not have to sell a house prior to purchasing this home. Contingency offers are risky and they delay closings. Most sellers want to close ASAP as, frankly, they want their money. During a contingency contract, the seller removes the home from the market in hopes the potential buyer can sell their home to purchase the seller's house. With multiple offers, the seller won't need to take a contingency contract.
If you love a house and it is at all possible to carry two notes for a short time, do it. If the market is hot enough where there are multiple offer situations on almost all good homes, your home should sell quickly, too. Talk to your lender and see if you have to sell your home first before buying another.
A contingency contract in a bidding war simply will not win.
Set a deadline to pull your troops out of the war. What I mean by this is - with an offer this strong, give the seller a hard deadline by which time the seller must respond to your offer or your offer becomes null and void.
As it is only human nature, sellers sometimes get greedy when there is a bidding war and begin to think "the next offer will be even better." That's not always true. Oftentimes, a bidding war and the large number of offers can get overwhelming for a seller. So, make your offer one they cannot refuse and give the seller a hard deadline to accept it quickly.
What is a reasonable timeframe for their acceptance of your offer? If you submit an offer at noon, give the seller until seven in the evening to give you a response or the offer becomes null and void.
Sellers' markets create tough situations for buyers. Trying to buy a home in a hot sellers' market can be frustrating and emotionally taxing. But, if you are going to have any chance of winning that house you want, you have to follow a few basic steps.
We hope the tips above give you the ammunition you need to win the house you want.
Jeff Knox is the Broker Owner of Knox & Associates Real Estate and his team of Dallas Realtors assists both buyers & sellers with homes for sale in Dallas, Frisco, Plano, Southlake, Highland Park, McKinney, Prosper, University Park, Colleyville, Dallas Condos, Grapevine, Coppell, Lantana, Allen, Flower Mound, Keller, SMU area, M Streets, Lake Highlands, Bluffview, Lakewood, White Rock Lake, Westlake, Wylie and all DFW real estate areas. Call us at 972-342-0000 for additional information on any of the areas mentioned above.