How to win a bidding war on your next home

Victorian_House_greenThere are bidding wars going on again in some hot markets or  just on some hot properties in normal markets — and some house hunters are getting beaten out way to often.

It doesn’t always come down to who has the most money. Sellers will often accept a  lower price if it means less hassle.

“What sellers really don’t want to do is waste time,” said John Walsh, president of Connecticut-based lender, Total Mortgage.

This is where being prepared can help you win. Have pre-approval ready along with all paperwork your lender will request like paystubs or other proof of income,  and bank statements. Then you lender is ready to write that pre-approval letter for any house your interested in.

The best option is always a cash offer, if you have the cash.

With more strict lender regulations more cash offers are appearing in the market.

Cash offers can close quickly, a plus for most sellers. Sellers might even sell for less with an all cash offer.

If you don’t have enough cash to bring to the table, how about getting a pre-underwriting a mortgage.

Some lenders are offering pre-underwritten mortgages. They will review all of the income and asset and work history documentation that they would typically need to approve a mortgage and get the ball rolling before the offer.

Sellers love a pre-underwritten offers.They don’t have to worry the buyer’s mortgage application will be rejected. It can also speed up the process after the contract and  get to the appraisal, in a short amount of time.

Some lenders I work with are claiming to close in 15 days or less with this process.

Be flexible with contingencies. Contingencies can be escape clauses that allow buyers to back out of deals if specific conditions are or are not met. A buyer will have a  financing contingency, stating  the appraisal must come in at or over the selling price, for example. Limiting or eliminating contingencies will get the sellers attention

A home inspection contingency is another common one. If the inspector discover a major issue, such as widespread insect damage or a water in the crawl space, it could cost way too much to fix.

Be the first to see the home the day it comes on the market. you may then get your bid in and accepted before anyone else.
that basically says you will pay $1,100 or $11,000 more than whatever the highest bid is up to a fixed amount say $230,000.

Say the seller gets another offer of $200,000, your bid will automatically jump to $201,100 if you have an escalation clause with a maximum bid of $230,000.

Using a cap means, however, that you may not end up with the home in the end.