What to Do If You’re in a Bidding War
The national association of realtors midyear forecast indicated that the number of existing homes for sale is expected to rise. While this ensures a favorable climate for real estate, bidding wars will break out and as much a bidding war is every seller’s dream as the prices rise, sometimes the war can hurt the seller. The following strategies can help you win a bidding war:
The following strategies can help you win a bidding war:
Have a Preapproval letter
One of the most important aspects of entering a bidding war is crunching your numbers and getting a preapproved letter from your bank and mortgage company so you know how high you can bid on a property. Including a preapproved letter from your bank can improve your chances of beating the competition.
It is, however, advisable to submit all your financial documentation to your bank or mortgage company before looking at any houses and making an offer. You can also discuss what loan options are available so that you don’t overextend yourself financially.
Include an Escalation Clause
If you’re in a bidding war, you can strengthen your bid by using an escalation clause. An escalation clause is a real state contract that tells the seller, the buyer is willing to increase his /her initial bid offer if another prospective buyer outbids them up to a certain amount. An escalation strategy shows interest in the property while allowing you to stay within your budget and walk away if the bidding goes beyond what you can afford.
You can also allow your offer to be a backup offer to the seller up to 20 days if the highest bidder doesn’t deliver on money or stops payment.
Make Sure You Realize If You’re in a Bidding War
In order to know if you’re in a bidding war, you should analyze the market where you’re considering buying property. Some areas in the country, particularly San Francisco and San Jose just to mention a few, have hot properties that don’t stay on the market for long. There are too many buyers and not enough houses. If you’re a buyer, you should observe how many people are at the open house and assess the houses thoroughly to know what you’re willing to pay for it. After you make an offer and your agent tells you there are higher bids, you will be apprised of the competition and make a decision on your next step.
For more on this subject read our recent blog, “Touring Homes? Here’s What to Look For”
Thinking of buying or selling a home in the La Jolla area? As consistent top producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Our team of local experts will ensure that you have a successful real estate transaction. Call us today at (858) 361-5561 or email us anytime by clicking here.