More homes will soon start to flood the market with the best time to sell coming up in a few weeks—and for those homebuyers wanting to secure their dream home, it's best to go in with a game plan.
If there's a home that you're interested in, chances are you're not alone. That's when a bidding war could happen, and you don't want to go over budget.
A bidding war happens when two or more parties compete for the same property by making offers. Each party will give its offer to the home's seller, and many times, it ends up driving up the final price well above asking.
The actual bidding process can happen quickly, and you need to go in prepared with how much you're willing to spend, what concessions you're willing to make, and knowing when to exit and walk away from the property.
How to win a bidding war
Money talks, and the person who bids the most money usually wins the bidding war.
Before you up the ante on what you think you can offer, you need to go through a checklist. Make sure you are pre-approved for a mortgage, have enough cash for a down payment, can afford to make a competitive offer, and think about the contingencies you're willing to give up, such as certain inspections.
"Win bidding wars by meeting seller preferences, not just price," says real estate expert Danny Johnson, owner of Danny Buys Houses. "Set a max bid to know when to exit, ensuring a financially sound decision."
Sellers usually prefer buyers who pay in all cash versus someone who will be financing through a mortgage. That's not always the case, but it's good to keep in mind when you're ready to buy.
LBC Mortgage CEO Alex Shekhtman suggests escalation clauses and seller perks to win bids.
An escalation clause is a section in a real estate contract that says a potential buyer is willing to increase their offer on a home if the seller receives a higher competing offer. When it comes to offering seller perks, faster closings and contingency-free offers are a plus.
In other words, if a buyer is making an offer on a new home contingent on selling their old home, chances are the buyer may lose out to the person who comes with an all-cash offer and can close quickly.
If and when you're ready to make contingencies, you need to make sure that forgoing an inspection is really worth it.
Shekhtman advises against overbidding and waiving inspections. He emphasizes "staying logical to avoid costly mistakes in the competitive homebuying process."
Remember, a home inspection checks the quality and safety of a property that's going to be sold. An inspector looks at all structural aspects of a home, its heating and cooling systems, plumbing, electrical, water, and sewage, to make sure everything is working properly. The property is also checked for fire and safety issues, damages, and anything that can affect its value.
Knowing when to exit
According to the latest weekly housing trend view from Realtor.com®, newly listed inventory grew for the ninth consecutive week. This signals that sellers are gaining confidence with listing their homes.
If you find a property you like, you need to know your budget, and if the price exceeds it, that's when you need to walk away. This will help you avoid any financial hardship or stretching your budget in the future.
For those looking to buy or sell, our economists identified the best time to sell—and that's the week of April 13. That best week offers higher-than-average home prices and buyer demand, met with lower-than-average competition from other sellers. The number of buyers browsing a listing can determine how many offers a home gets and how quickly it sells. The more buyers looking at a home, the better for the seller.
Read more at Realtor.com
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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.
