How to Win a Real Estate Bidding War without Being the Highest Bidder
With the real estate market in the Olympia, Lacey and Tumwater, WA areas shifting to a seller’s market, buyers are finding themselves in a bidding war. But buyers can win without being the highest bidder and here are the two key points buyers should know when preparing an offer:
- Understand the Seller’s Wants and Needs
- Understand What Your Competition is Doing
Sellers want to be guaranteed the buyer will go through with the purchase.
Buyers must get approved by a local, reputable lender. The key words to point out here are “approved,” “local,” and “reputable.” Approved means handing over to your lender all your financial statements, tax returns, pay stubs and making an application for a loan. A quick phone call telling your lender your income and maybe some of your debt does not APPROVE you for a loan. Talk to your agent about finding good local and reputable lenders.
What Your Competition is Doing – Paying cash. A cash buyer is tough to beat but in the end, a mortgage is cash, too, to a seller. A cash buyer tends to offer less in exchange for a shorter close period and typically no financing contingencies (like an appraisal contingency). But a seller may want the higher offer in the end, so buyers who are financing have a shot but this isn’t the time to low-ball on the offer price.
Sellers want to minimize their risk when they take their listing off the market while the buyer does their due diligence.
Eliminate as many contingencies as possible. In Olympia, WA, our contracts are very pro-buyer where buyers are given every opportunity to do their due diligence and then gives them the opportunity to back out of the agreement quite easily. Examples to strengthen the offer could be shortening the timelines for contingencies or removing contingencies altogether, but buyers, make sure you understand the consequences of taking this action.
What Your Competition is Doing – Removing as many contingencies as possible including the big ones like the home inspection contingency and even the financing contingency.
Sellers want to work with a buyer that seems reasonable.
Buyers, pay your own closing costs. This one will cost a buyer money, but also closing costs are generated by a buyer using a lender. So buyers, don’t think any seller is obligated to pay your closing costs. Many times a buyer can win the war by showing the seller that they have ownership over their own expenses and are not asking the seller for help with their finances.
What Your Competition is Doing – Either paying their own costs or raising the purchase price to cover their closing costs. Buyers are also offering to cover some of the seller’s closing costs such as title and escrow fees.
In the end, understand that sellers want and need a guarantee that a buyer will go through with the purchase. Many issues can come up that brings the transaction to a halt, and sellers want to minimize that risk as much as possible. If buyers can make themselves as solid as possible, buyers can beat their competition without being the highest bidder.
You might also be interested in reading, How savvy homebuyers can negotiate successfully in a seller’s market
Originally posted on my blog site www.InTuneRealEstate.com where buyers and sellers can get more tips and learn about the Olympia, Lacey, Tumwater and DuPont real estate markets.
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