Help Your Buyers Win a Bidding War
Bidding wars are heating up across the country as buyer demand continues to offset the number of homes for sale. Buyer competition is even affecting towns that rarely see bidding wars, due to the lack of lower-priced inventory.
For buyers with school-aged children, there's an added urgency in wanting to find a place before the fall.
“Buyers were waiting and waiting for inventory to open up, and they’re looking at the school calendar and thinking they need to get settled before the school year starts,” Betsy Ceccio of Keller Williams in Montclair, N.Y., told The New York Times. “The clock is ticking.”
So in particularly hot markets, how can your buyers come out ahead in a bidding war? The New York Times recently offered some of the following tips from housing experts:
- Get preapproved for a mortgage. A preapproval letter from a lender – note, not prequalified – can show that a buyer is a strong candidate in obtaining financing.
- Have a strong start. What can you most afford? Bid accordingly. That said, “don’t go to a point where you think it’s going to be too much to handle,” says Caroline Baccellieri of McClellan Sotheby’s International Realty in Pelham, N.Y. Also, if buyers offer more than the asking price, make them aware that their mortgage lender may still appraise the home at a lower value. This could then leave them having to pay the difference.
- Waive the mortgage contingency, but ... Sellers tend to prefer offers that are not contingent on the buyers’ ability to obtain financing. So in hot markets, an offer contingent on the mortgage could be viewed as a detriment. Yet, without this contingency, buyers can run a risk of losing their deposit if their financing ends up falling through. They’ll want to weigh this one carefully and consult a lawyer.
- Don’t just bank on the letter. A heartfelt letter attached to your offer has gotten some buzz lately as a winning strategy. While a nice touch, “don’t expect them to distract the seller from the bottom line.”
- Cash. And one of the best ways to win a bidding war: Offer cash. Sellers like all-cash offers because it provides more certainty the deal will go through and without delay. If an all-cash offer isn’t practical, have your buyer find other ways to provide the seller certainty that the settlement will go through.
Source: “Bidding Wars in the Suburbs,” The New York Times (June 17, 2016) and “Checklist for Winning a Bidding War,” The New York Times (June 17, 2016)