How To Win A Bidding War When Real Estate Inventory Is Low

Finding homes for sale in Burlington can be a challenge even in the best of times. It’s even trickier when the demand for property far exceeds the supply. That’s what happened since the beginning of the coronavirus pandemic. These days, more and more people are looking to buy a house. They may find themselves able to work remotely, so they’d like to move out of the city. Perhaps they require a dedicated office space. Thus, they need a bigger home. Unfortunately, there is such a large demand that the inventory is depleted and therefore buyers are finding fewer options. You’re likely to find yourself in tough competition when house hunting. Follow these home buying tips on how to win a bidding war to give yourself an edge.

Know Your Budget

One of the best things you can do for yourself before you begin your home search is to determine how much you can afford. Knowing your budget will ensure you don’t fall in love with a house you aren’t able to buy. It also helps you to stay within realistic boundaries when engaging in a bidding war. A simple mortgage calculator can help you to figure out a maximum budget.

Get Pre-Approved

Going through the financing process and obtaining a pre-approval letter from your lender can make you a more attractive contender in the case of a bidding war. Sellers will know that you’re serious about your desire to purchase their home. They’ll also appreciate the assurance that you’re able to afford the bid you place.

Provide More Money Upfront

If you can provide sellers more money upfront, you might increase your chances of coming out ahead. This money typically comes in the form of a higher downpayment. Deposits typically start at a minimum of 5% but can be higher in the case of a bidding war, you might offer 10% or more.

Offer a Higher Price

Simply offering to pay a higher price is one of the best strategies to win a competitive bid. Paying over the asking price is not a simple science and requires the guidance of a seasoned realtor who can assess the number of offers and the strength of your position. If you plan to go above the appraised value, you may need to contribute cash out of pocket at closing, as many lenders won’t allow the loan to be for a higher amount than the home is worth.

Waiving Conditions

A condition is a clause that allows you to back out of the deal in the case of certain events such as a home failing inspection or losing your financing. Conditions are meant to provide an opportunity to assess your purchase further. Forfeiting them can be a risk, but it is what we commonly see in this market. To be competitive you must be financially sound, consider pre-inspections to be competitive and be quick to view a property, and take the time to prepare as an attractive offer as clean as possible. It could be a move that puts you ahead.

You’ll also want to be flexible and ready to move as quickly as possible if that’s what the seller wants. Be prepared to be accommodating in order to appeal to sellers. Hopefully, these home buying tips will put you ahead in the event of a bidding war. Best of luck.