While the housing market remains vibrant, low supply continues to be an issue. Many call it a “seller’s market,” which often results in a bidding war as multiple buyers compete for the same property. Here is how you can still get your dream home despite high competition.

Anatomy of a Bidding War

A bidding war in real estate happens when two or more parties compete for the seller’s acceptance of their offer. This stressful situation can be intensified if the owner or listing agent knows there’s a lot of interest and propose that everyone submit another higher and better offer.

Thus, you have now entered a bidding war. 

It’s easy to get caught up in the thrill of outbidding your competitor, but it’s essential to watch your step. You don’t want to enter into a purchase agreement that you can’t afford — all in the name of beating everyone else’s offer. 

That’s why we recommend applying for a mortgage first. Not only will you know right away how much you qualify for, but you’ll also have a trusted loan professional crunching the numbers for you, letting you know precisely what your monthly payments can be. And together with your real estate agent, you’ll know how much you can afford to bid.

Get Pre-Approved for a Home Loan

Mortgage pre-approval is a big deal when there are multiple offers on one property. Being pre-approved means you already have the financial backing you are claiming in your offer. It also means you are ready to move forward with the purchase now, without needing to wait for a bank’s decision on your home loan worthiness. 

Pre-approval also means you’re bidding with confidence. Home shopping is stressful enough without a bidding war and the uncertainty of making an offer without financial backing. Boost your confidence (and that of the seller) by going in already approved for a home loan.

Drop Contingencies

Sellers looking to move quickly want as few obstacles as possible. One way to do that is to omit contingencies on your offer. The last thing a seller wants to do is go through all the steps of moving the deal forward and then having to put their house back on the market because the contingency deal fell through.

This may happen with an appraisal contingency, where the lender won’t pay more for a house than it appraises for. But in a bidding war, you may have to go above the appraised value to win it. How buyers get around this is by paying the difference. For example, you can make an offer of the appraisal price plus $5,000.

Just remember, it’s up to you to pay the difference. The lender will only pay up to the appraised value of the property.

Another contingency some buyers drop is the home inspection contingency. Some decide to waive the inspection entirely, while others have an inspection to be aware of possible issues but won’t have the sale contingent on the findings.

Be Flexible

Motivated sellers love flexibility. For example, a seller may want to delay the closing date to let their children finish the school year before the move. Others may wish to move as soon as possible because they have a job waiting for them in a new city.

Whatever the case, the ability to be flexible in these types of situations is a huge bonus for many sellers.

Get Started

Now that you understand how a bidding war works, you can use these strategies to get your offer to the top of the heap.

Visit kendallmortgage.loan to learn more about our loan programs, process, and team, as well as helpful information and home-buying resources.

When you’re ready to get started, you can contact us directly or complete our secure, no-obligation online mortgage application.