Minimize the Cost of Bidding Wars
While it generally is a good idea to avoid a bidding war, to help save the buyer money. There are some ways to help to not only help a buyer win a bidding war but also minimize the financial toll.
When making a purchase offer it is important for buyers to understand the local market. By researching how much comparable homes are in the area are selling for, buyers can help get a sense of how much they will be spending on a home. While there is some wiggle room when it comes to the price, buyers should try to stay at a reasonable amount that makes sense for the condition of the home, the size and the area it is located in.
It is important to look at the big picture and consider the expenses beyond the asking price. Since most buyers will require a home loan, the closing costs associated with the mortgage, the fees and expenses that come with a mortgage can add up. Therefore, you must take these costs into account before you start upping your purchase offer.
Some homes may require additional maintenance or repairs, so make sure these costs are analyzed before making increasing your purchase offer.
The appraisal of a home is a vital component. Mortgage lenders will only provide a certain amount of financing based on how much a property is appraised for. Therefore, buyers who enter a bidding war and go over the appraised value are essentially willing to pay the difference out of their own pocket.
When it comes to winning in a bidding war, it is important to differentiate yourself from the competition. One way to do this is by showing the seller they are more serious than the other buyers. Homebuyers that put in a purchase offer and attach their mortgage preapproval are saying “I’m ready to get this deal moving!” At the end of the day homeowners will want to deal with someone who will follow through. Of course, it is also important to make sure that their offer isn’t too low. There is a difference between being frugal and insulting a seller with an offer that is too low for a purchase offer.
In any case it is important that buyers make sure they can afford their offer in the first place. Planning is a vital part of homebuying. Another way to plan is to use the mortgage calculator that is available.