On March 16, shortly after listing a new property, my cell phone rang nonstop. Within 4 days, I received 17 written offers to purchase. On a Friday at 3 pm the owners and I met -spread the offers on the dining room table and the owners made a decision. Calling the winner was fun. Calling the 16 who didn’t win was not fun. No one wants to lose, especially if they have begun to imagine what the home would mean to them. It’s an emotional Big Deal! Multiple offers aren’t new but they are rampant now.
How to Win a Bidding War
For a Winning Strategy, Plan Ahead
1. Make your highest offer
Know your own limits. If you have money available, make an “all cash offer”. If you don’t need to apply for a mortgage your bid will be powerful. The owner doesn’t have to wait or worry about your financing approvals. If you need to have a mortgage, have a preapproval letter ready to submit with your bid. Note: A pre-approval letter is not the same as a pre-qualification letter. The pre-approval letter shows you have given the bank some documentation and the bank has taken steps to give you a mortgage. Have your lender ready, with short notice, to customize this letter, to the house and amount you plan to pay. Even with an “all cash” offer you should present a letter from your bank showing proof of funds.
2. Minimize Contingencies
This is tough and risky. In recent bidding wars, I have noted the buyers who said “no inspections required” had already done a quiet review. They had read the owners disclosures. They had toured the house with someone who knew about building construction who could point out any noticeable problems. If you give up inspections, calculate the cost of potential repairs and make sure it fits your budget. If necessary, note only certain inspections required i.e. well, septic or foundation. Promise inspections will be done right away. One buyer said, they had their inspector on speed dial, so they could clear inspections quickly.
3. Find Out Seller Needs
Adjusting the closing date to match what the seller needs can push your bid to the top. The seller may need to sell before buying another house or the seller may need time to find a place to rent. You may discover as I did, a Seller who had to quickly relocate to Germany. When the Buyer agreed to care for the rabbits in the house for 2 months after the closing, we had a deal!
4. Write a Letter to the Owner
While you are touring the house, think about why you like it. Many owners are sentimental and your note saying you love the cozy breakfast nook, the kitchen window view of pretty birds enjoying the bird feeder, the giant closet with so many shelves, the enclosed porch perfect for growing orchids….The list with all the property details you love, will give the owner the feeling you will continue to care and let’s the owner know why you want to buy their home. I have noticed a “love letter” presented with the offer to purchase can sometimes get more attention than the official offer.
5. Keep Your Thoughts to Yourself
Even when you find the house of your dreams, in reality it may not be perfect. Pointing out imperfections is not a winning strategy. Keep in mind, nanny cams and recording devices are in many homes. Making written notes as you tour is a good idea when you are evaluating homes. In a recent bidding war, I couldn’t understand why the owner refused to consider one of the top offers. She told me she came home the day this Buyer had just finished touring. He was talking with his Realtor in the driveway. The owner had her upstairs window open and she heard him tell his Realtor how he would tear down immediately the trashy garage (built by the owner’s father). The keep your intentions quiet rule should apply to all public places. The owner or the owner’s best friend may be sitting in the restaurant table next to you.