A few years ago real estate buyers had the upper hand when it came to home purchases. This is because there were plenty of sellers and few buyers. As such, the buyers could set the price, and the sellers had to compete based on these prices. However, times have changed and there are few affordable Penticton homes for sale in the market.
That means that as a home buyer, you have to compete for the same house with numerous other buyers. In economic terms, this is what we call a seller’s market. Different buyers have to place offers on the same home, hoping that their bid will be accepted. If you are new to the bidding game, you need all the help that you can get to land that dream house. Here are a few tips that might help:
The Five Strategies to Use
1. Have Ready Cash
Being in a bidder’s war is all about using your wisdom and negotiation skills to convince the seller that you’re the right contender. You need to note that cash offers are more lucrative when compared to mortgage payments and credit transactions. This is because cash tends to be more liquid and convenient.
Furthermore, showing the seller cash tells them that you are serious about the house and want to move in as soon as possible.
2. Bid the Highest
Being the most obvious tips of all, offering the highest price is a smart tactic to use in almost any bidding situation. By beating the top contender with a slightly higher offer, you’re likely to secure the house without even going further.
However, you need to know that some seller markets have a never-say-never bidder competition. This comes as no surprise because some buyers are willing to pay thousands of dollars above the original asking price. They do this because they are desperate to secure their family’s dream house.
Therefore, if you wish to outbid others in the market, you must be ready to dig a little deeper into your pockets.
3. Send a Personal Letter
A bidding war can be very hard to succeed at if you don’t go the extra mile to woo the seller. In this sense you can write a personal letter to the seller.
In the letter you can tell the seller why you need the house and why it would be ideal for you and your kids to live in. Sellers are human beings just like you and bringing a human aspect to your bid could easily turn things around.
The best way to do this is by first assessing the character of the seller. You can visit them at their home and take a look at their pictures, trophies or any other memorabilia that can help you determine the things you both have in common.
4. Apply the Use of an Escalator Clause
In the world of real estate, an escalator clause is a contract agreement that allows a rise in wages or prices based on particular conditions. It’s important to take note that a majority of buyers tend to place a plain bid with no escalator clause. This is because they are not ready to incur any extra charges in the future.
The power of being financially organized is that you can include an escalator clause that will outbid other offers and secure the home.
5. Get a Written Loan Pre-Approval
If you’re like most buyers, you will probably use a mortgage to buy the house. The thing that sellers hate the most about mortgage buyers is that they may not always be approved. As a smart buyer, you have to think ahead.
Go to the lender before you make your bid and ask them to reassure you that they will give you the loan by writing a pre-approval letter. If you have a good credit score and a good relationship with the bank, don’t be afraid to ask for reassurance. Then, take this letter to the seller. You can also do away with the financial contingency contract to reassure the seller that you are going to take the house if they accept your bid.
Winning a bidding war in a seller’s market is mostly about brains and making careful decisions. The most important thing is to show the seller that you are serious about the house, and you’re ready to pay and move in as soon as they accept your offer. Use the above tips to do this effectively.