Low supply mixed with high demand in any market is going to create some serious competition for buyers. In the housing market, it is the exact same. Realtor.com says some homes sell for $50,000 to $100,000 over the asking price with 20 to 30 offers. This much competition can be stressful, and with something as important as buying a new home, it is crucial that you have the right advice on how to win a bidding war in today’s real estate market.
As a buyer in the Winter Park area, preparation is key when it comes to winning a bidding war. First, you need to have your financing in order before anything else. It would be best to have your earnest money deposit ready, know how much you can pay towards the down payment, and review your credit profile. Next, you should understand what you are looking for in a home and what neighborhoods in and around Winter Park you would want to move into the most. Most importantly, it would help if you surrounded yourself with experienced real estate professionals that work on your behalf. These real estate professionals include a realtor, a mortgage loan officer, and a real estate attorney or closing agent, if applicable.
Another critical thing to understand is how much you want to pay for a home and how much you are able to afford to pay. In today’s market, those numbers can be very different. So if you find yourself in a bidding war for a home, you will need to know how high you can bid, and if you reach your max bid and you’re still not competitive, here are some tips!
Tips for staying competitive in a bidding war:
Get Pre-approved – A pre-approval is one of the essential steps to getting approved for a mortgage. At MEP-Winter Park, our pre-approvals are fully underwritten, and they show that you are a serious buyer and an approved buyer. A pre-approval also speeds up the loan process, which can be the deciding factor for the seller when accepting an offer. You will already have most of the upfront work done with a pre-approval, and the rest of the process move quickly after that!
Waive Contingencies – Contingency clauses are important and allow buyers to back out of a contract if certain conditions are unmet. One of the most common contingencies is the mortgage contingency which lets you out of a contract to purchase a home if your financing doesn’t work out. But, of course, you only want to do this if you are confident that you will be approved for a mortgage.
Escalation Clause – An escalation clause allows buyers to increase their initial bid by a certain amount each time another higher bid comes in. It is a good idea to put a cap on an escalation clause.
Write a love letter to the seller – Writing a love letter was unique, but it became more common and may have lost its charm. Basically, buyers will write a letter to the seller telling them why they are the right buyer for their home. According to Realtor.com, many buyers are still excited to write them.
MEP’s Property Inspection Waiver Program – The property you are looking at in and around Winter Park may be eligible for an inspection waiver. Our new tool allows LO’s to get a PIW before you make your offer which makes it much stronger, and you know how high you can go up in the bidding war without having to worry whether the house will appraise at the right price and if you will still qualify for the loan. Mortgage Equity Partners loan officers can walk you through this process but contact us first to have the information you need in advance of making an offer.
If, at first, you don’t succeed, keep on trying. If another buyer was chosen over you, that doesn’t mean some part of their transaction might not fall through, and if you have a competitive enough offer, you might end up being pleasantly surprised that you are next on the seller’s list!