6 Smart Strategies for Winning a Bidding War on Your New Home

6 Smart Strategies for Winning a Bidding War on Your New Home



You’re making your way steadily through the home-buying process: you’ve got a real estate agent you click with and enough money saved for a down payment, as well as a top home price in mind and a mortgage pre-approval letter in hand. You have a pretty solid idea of what you want in a neighborhood and a home, too.

But after looking at house, after house, after house and nothing, you finally walk in and get a feeling. This is it, you think. This is the house. You work with your agent to write up an offer that will make it yours. But then you hear back: You’re not the only one who got the feeling. The home has inspired multiple offers. You’re about to enter a bidding war.

What Is a Bidding War?

A bidding war happens when several parties make offers on a home that’s hit the market. The seller then requests each party’s “highest and best” offer by a set deadline, in an attempt to ensure they entertain each party’s most attractive offer. Note it’s not just the “highest” one: There are factors beyond the sale price that can tip sellers in your favor.

6 Smart Strategies to Win a Bidding War

We spoke to the pros to find out their favorite ways to make your “highest and best” the winner.

1. Enact an Escalation Clause

This smart tactic allows you to auto-increase your offer in response to competing bids, up to your top dollar. Better Homes and Gardens Real Estate agent Eddie Gutierrez recently used the clause to help win his clients’ dream home in the competitive Milford, CT, market. “Their offer beat out three other competitive bids, and they successfully closed on the home within their budget,” Gutierrez says. “Without the escalation clause, they likely would’ve been outbid.”

2. Tell Your Story

“We once won a bidding war where we weren’t the highest bidder because we were transparent about our story and plans to bring it back to like-new condition, including a detailed budget,” says Lincoln Edwards, co-founder of Homemade, a Texas-based home renovation platform for homeowners and house flippers. “It’s all about creating a connection,” he says.

3. Check in with the Seller

Your agent leads this effort, connecting with the seller’s agent to learn their backstory, including anything that might influence them in your favor. “You’d be surprised; it’s not always financial,” says Myron Kiriu, a Better Homes and Gardens Real Estate agent in Honolulu, HI.

It might mean a lot to them that you could put off closing for a few months or want to raise a family here, for example. Once your agent finds out their specific mix of preferences, do all you can to craft your bid accordingly.

4. Remove Inspection Stress

The home’s inspection is the most common time for buyers to back out, so anything you can do to make it less stressful for sellers helps. Kiriu’s recent client was in the building trades and assured the sellers he wouldn’t nitpick minor issues the inspection brought up. Waiving it is an option too, though this leaves you responsible for major defects.

A seller working with Jack Gross, Better Homes and Gardens Real Estate agent in Lehigh Valley, PA, felt pressure to do so in her low-stock market. He says that getting a general contractor friend to check out the home with her eased her mind enough to waive the inspection—and get the house.

5. Be Prepared to Close Quickly

This could put you ahead of other, higher bidders who aren’t as agile. “Having all your paperwork and financing in order can help expedite the closing process, which could be attractive to the seller and their broker, anxious to get a deal done quickly,” says Investopedia editor-in-chief Caleb Silver.

This could include kicking off the loan underwriting process, Gross says. His recent client did this and was able to close in under thirty days.

6. Put More Cash Down

If you have more cash reserves than you decided to factor into your initial offer, now is the time to revisit that decision. “My advice is put as much down as you can to prove your seriousness,” Gross says. It makes you more attractive to both seller and lender, which could make all the difference in a competitive market in winning the war and netting the house you want.

When to Tap Out of a Bidding War

It’s easy to get emotionally attached to a home, and it can be tempting to do whatever it takes to win it. Still, do not go over your predetermined top dollar, says Briana Johnson, Better Homes and Gardens Real Estate agent in Jacksonville, FL. “Let your monthly payment cap determine your purchase price cap, and stick to it,” she says. If the home ends up selling for higher than you’re able to pay, you can rest assured that it wasn’t the right one for you. This means yours is still out there. Time to reset and continue your search.



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