With so many buyers in the market and so few homes for sale, you may be wondering how to win a real estate bidding war. If not, it’s a question you may want to ask yourself, especially if you’re ready to buy a home at a time when the competition is stiff.
These days, bidding wars are nearly unavoidable, which is why having an expert team of professionals who know your market is essential.
Before we dive into strategies for coming out on top in a real estate negotiation, let’s cover a few basics to ensure you’re successful.
- Know your market & your budget. We’ll get into this more in a moment, but managing realistic expectations is key when embarking on a house-hunt.
- Select a team that knows your market and has performed well there before.
Alright, now that we’ve gotten the first steps out of the way, let’s dive into how you can win a real estate bidding war.
A recent survey shows that only 52% of active homebuyers obtained a preapproval letter before entering their home search. That means about half of active buyers missed out on this key part of the process.
Buyers who are preapproved are a step ahead when it’s time to make an offer. Having a pre-approval letter indicating you’re a qualified buyer shows sellers you’re serious. Besides, your Realtor® can’t submit your offer without one.
Most agents won’t show you homes without a mortgage preapproval. Besides, mortgage preapprovals are being used as benchmarks to limit exposure to COVID-19. Even if you were to somehow get a Realtor® to show you a property, your offer would never be accepted, as you don’t have a preapproval letter that’s good for 90 days from a lender of how much you’re preapproved for. Remember, your competition has one, so you’ll need this if you’re going to get to stand out, too.
It’s best to contact a mortgage professional to start your preapproval process early, so you’re in the best position right from the start of your home search for when the right property comes along.
Present Your Best Offer
In a highly competitive market, it’s common for sellers to pick a date and time to review all offers on a house at one time. How to win a real estate bidding war often depends on, well, your bid and its contingencies.
If this is the case, you may not have an opportunity to negotiate back and forth with the sellers. The National Association of Realtors (NAR) notes:
“Not only are properties selling quickly, but they are also getting more offers. On average, Realtors® reported nearly three offers per sold property in July 2020.”
Make sure the offer you’re presenting is the best one the sellers receive. A strong and experienced real estate professional can help you make sure your offer is a fair and highly competitive one.
With existing homes going like hotcakes, there’s no time to waste in the process. NAR reports how the speed of home sales is ramping up:
“Properties typically remained on the market for 22 days in July, seasonally down from 24 days in June and 29 days in July 2019. Sixty-eight percent of homes sold in July 2020 were on the market for less than a month.”
In addition, NAR notes:
“Total existing-home sales…jumped 24.7% from June to a seasonally adjusted annual rate of 5.86 million in July. The previous record monthly increase in sales was 20.7% in June of this year. Sales as a whole rose year-over-year, up 8.7% from a year ago (5.39 million in July 2019).”
As you can see, the market is gaining steam. For two consecutive months, houses have sold very quickly. Essentially, you may not have time to sleep on it or shop around when you find a home you love. Chances are, someone else loves it too. If you take your time, it most likely will not be available when you’re ready to commit.
The housing market is strong right now, and sellers are receiving multiple offers. As a result, buyers are scooping up available homes faster than they’re coming to market. If you’re concerned about how to win a real estate bidding war against a stampede of new buyers, get in touch with us.
We help buyers stand out in a competitive market with cutting-edge resources & expert knowledge.
Contact one of our team members to give your house hunt the edge it deserves.