Bidding wars will likely gain popularity as the housing market improves. More buyers are entering the market and as demand rises, the opportunity for more offers on a desirable home is more likely.
As a buyer or seller you will adapt to a situation like this differently. While a bidding war is a great opportunity for a seller, a buyer might be stuck paying a higher price for his or her dream home.
Know how to navigate through a bidding war as a buyer and be able to win the ultimate prize.
Identify whether the home is worth entering a bidding war
While it may be frustrating having multiple offers denied, you do not want to enter a bidding war and wind up paying too much money for a home that isn't perfect, according to Realtor.com. Make sure the home you are looking at is worth making a higher offer on and that you are financially capable of committing that much money to purchasing property.
"To guard against making an emotion-fueled offer for a house, take a hard look at your finances," noted Realtor.com. "While it may feel good at first to beat out other buyers and to purchase a property, it won't feel so great in a year or two when you are struggling to make the payments on a house beyond your means. Know your limits before you begin to bid."
Get the help of a real estate agent
A professional in the housing industry can provide you with a great deal of insight and help you navigate through the entire homebuying process. This is especially important during a situation such as a bidding war. According to The Washington Post, a real estate agent will work for you and help you find the perfect home.
Additionally, your referral is valuable to an agent. He or she wants to ensure you are happy with your experience with him or her. This further ensures you will likely get a positive experience by working with a industry professional during the bidding process.
Your real estate agent can also help you prepare for what's in store when embarking on a bidding war. He or she can tell you about current local market conditions and the true value of the home. It is also a good idea to ask to see other homes in the area to determine how the home compares to its neighbors.
You will also want to consult with your lender to know exactly the maximum amount they will provide to you for a new home. You want to ensure you can actually pay the price you offer.
Develop a strategy
When involving yourself in a bidding war, it is crucial to first go in with a strategy. You want to hire a real estate agent who will present your offer quickly and efficiently in an appealing manner. Additionally, you can make your bid stand out in other ways aside offering more money.
Consider writing a personal letter to the seller to help yourself stand out from others. Let them know you love and appreciate the place they have called home for so long. Personalizing your offer can help increase the appeal to a seller and you may be more likely to win the bid.
Also eliminate contingencies. Consider having a home inspection done without making your offer dependant on the inspection's results.
While money isn't everything, it certainly can help during a bidding war. Being pre-approved for a loan can make your offer more appealing to a buyer and offering to cover closing costs can also help it stand out and increase the likelihood of you winning a bidding war.
Know your limits
A bidding war can get exciting and you may lose sight of your finances. While the perfect home is very attractive, remember that you do have other options. Control yourself when bidding on a home and make sure you stay within the limits of what a lender will provide as well as what you can truly afford.
Celebrate if you win
Winning a bidding war is great news. Make sure you celebrate with friends and family. You win twice when your offer is accepted - being chosen out of a crowd of other bidders and moving into the perfect home.
Don't get down if you lose
While it might be frustrating to lose a house you thought you loved, don't let it bother you too much. Remember there are other homes for sale and if it wasn't meant to be, something else that is even better will come along.
Go out for dinner or cocktails with your friends and family to get your mind off of the bidding war. Keep your spirits high and keep looking for your ultimate dream home.