5 Tips to Survive a Real Estate Bidding War

So you’ve found your dream home. It has all the features you love, is in an ideal area, and is within your budget — score! But there’s one more thing. You’re not the only one who loves this home, so now you’ve found yourself in a bidding war. Bidding wars didn’t get their name by being a delightful process. Although the term “war” may sound a little dramatic, it’s no doubt a bidding war will require determination, patience, and preparation. Buying a home is a big, often emotional, decision. And on top of that, the stress of a bidding war can be overwhelming. But the following tips will help you strategically survive the ups and downs of bidding wars, with as little stress as possible.

So what exactly is a bidding war, and who's involved?

A bidding war occurs when two or more homebuyers have placed an offer on the same home. In most circumstances, a bidding war is conducted between agents, who are the liaisons between you and the competing homebuyers. Having your agent negotiate on your behalf is helpful so you’re a layer removed from the bidding process. This ensures emotions are left out of direct bidding negotiations, which is a good thing. Even with your agent’s help, there are still some things you can do to help alleviate some of the stress during the battle.

1. Be prepared

It’s imperative to have all your ducks in a row, especially financially, when entering a bidding war. Before you start your home search, contact your lender to ensure you’ve been conditionally approved. You may request a conditional approval letter, which can help increase your chances in edging out the competing buyer. You may also want to sit down with your agent to review all what you’re willing to negotiate prior to placing your bid. As mentioned before, your agent is your liaison, so you want them to be able to represent you and your interests with ease. This is helpful when the negotiations get tight and the back and forth between agents become more frequent.

2. Be accessible

The last thing you want is to miss a phone call from your agent looking to confirm your bid, only to return their call and discover it is too late. Be sure to keep your phone on you, and keep an eye out for emails and text messages from your agent. Notify your work, friends, and family that you’re in the midst of a bidding war, asking for their understanding in advance that you may need to take personal calls or step out with limited notice. If they’re a homeowner who’s been through a bidding war, they’ll surely understand and empathize. We also recommend not scheduling any vacations, or hard commitments during the process of your bidding war. You’ll want to make sure that, if needed, you could be on-site at your prospective home within 20 to 30 minutes notice.

3. Be personal

Do your homework on your prospective home and its seller. Nothing too invasive, but ask your agent if they can get any small details that may aid you in adding a personal touch to your communication with the seller. Sometimes a handwritten letter referencing their interests or passions may give you an edge over the competitor. It’s understandable that most sellers have an emotional, nostalgic connection to their home. Addressing this in a sensitive manner shows you’re more than just a buyer, but someone who understands the difference between a house and a home.

4. Timing is key

Timing is critical during a bidding war. Your agent will be a great resource for giving you strategic advice on the best time(s) to place a bid. It would be disheartening to miss out on your dream home due to your delay in getting documents in order or stalling the bidding process by being indecisive. Additionally, keep timing in mind when structuring your bid. For example, placing a bid with a shorter inspection period could not only be more attractive to a seller, but also indicates your commitment and passion for buying this home.

5. Be open-minded and flexible

There are plenty of tragic stories online and on TV where homebuyers came out on the losing end of a bidding war. As harsh as it may sound, it’s good to prepare yourself for potential bad news. But this doesn’t mean throwing in the towel at the first negotiation. Remain diligent in your bidding war, but be mindful not to over-invest your emotions. You don’t want to be disheartened should the negotiations land in the competitor’s favor. And consider the idea that sometimes things really do happen for a reason. Maybe there’s a better home out there for you. Also, be flexible with your contract details. Sometimes something as simple as a quicker closing or asking for less seller-paid closing costs will make your offer more attractive than a competing bid. Just be sure you have adequate funds to cover all your closing costs. The home buying process and bidding wars can be emotionally taxing. Do your best to remain prepared and educated throughout the process, while maintaining an open mind. In the meantime, an Atlantic Bay mortgage banker will be happy to help you get your financing in order (step one!) prior to a potential bidding battle.