The Art of (Bidding) War
Isn’t it great when you find the perfect house and it fits within your budget as well? The only not great part is many other people who want it too, and you are going to have to beat the competition to make that house your home. The housing market in the Durham region is very active thanks to so many people moving here and every good house we have seen, more likely than not are being sold having multiple offers. So if you really have that house and are sure to be facing a bidding war, here are some tips to help you win the war.
How to Win a (Bidding) War
People usually stress about bidding wars; they are afraid that they may end up paying too much for the house, and at the same time, are afraid that they might not get the house they want. We have been in bidding contests a lot, so let us give you some insights which will ease the process.
Look at the past SOLD’s in the area
Know the worth of the fight
Have your agent research the area to find the average selling price for the same type of house in the same area you are looking to buy, make sure the comparable properties they show you are current and not out dated (in a seller’s market only look at the past 6-9 months). Buying a house is the biggest purchase most people make in their lives so it is understandable if you are stressing about this number. Once you have an idea about the real worth of the house, you will know what your maximum offer should be and can remove emotion from the decision. The last thing you want to do is overpay for a house and getting your agent to do the homework will at least educate you but still the decision is yours.
Take stock of your ammunition before going into battle
Before you start looking for your dream home it is a good idea to work with your mortgage broker to get you pre-qualified for a mortgage. Although getting pre-approved for mortgage doesn’t mean you are guaranteed to get the money, it will give you the confidence that you are likely to get it. In today’s era, the lender might require an appraisal on the house you are buying before they release the funds. Since they have an interest in the house the want to make sure the purchase price is in line with the market’s value. Another benefit of a pre-approval is the guaranteed interest rate for 90 to 120 days. If interest rates are on the rise, getting pre-approved will hold your rate for a period of time even if rates go up. Lastly, have your lender print out an approval certificate and give it to your real estate agent. This will give them more ammunition when presenting your offer.
Pre-inspect the house
No good commander goes into battle without surveying the battlefield first.
You really should know everything about the house before you buy it so if you really want this house, consider a pre-inspection. Find out about any caveats beforehand; many offers are firm with “no condition” so it is better to inspect things rather than have buyer’s remorse later on.
Go for a larger deposit
Shock and Awe
The best way to set a seller’s mind at ease about selling a house to you is to offer a bigger deposit. The extra deposit makes you look better than other buyers because it shows the sellers that there will be no money issues if they choose to sell to you. If you need more time to get some more money together but it will be too late for this house, consider a “further deposit”. This will allow you to put in a second deposit at a later date before the house closes.
Be there while bidding
A real commander leads from the front
You would be surprised at the number of times we have won the bidding war simply because we were there in person while the other parties were not. Most bids are submitted electronically these days leaving the door open for the smart buyer and their agent who are present during the offer presentation. If the seller wants some clarification you are there to answer. If there are two offers are the same chances are they will take yours. If there are any required changes by the seller you are conveniently right there.
Remember, it is much easier to sit at home and see how the bid goes, but if you really want to win that house, you need to work for it.