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GETTING THROUGH A REAL ESTATE BIDDING WAR
Bidding wars are a scenario where there is interest from two or more people on a particular item and they compete on the offers they make as the one with the highest offer is wins the ownership of the specific issue to which they were fighting for.
Real estate bidding wars thus are the situation competitive offers on real estate merchandise, say a house, to become its new owner.
Despite the increase in this price, they sell like hotcakes.
The high demand, on the other hand, has not only played its role in the price increase but has also brought about bidding and bidding wars.
You thus have to prepare adequately if you want to buy a home to help you cope with contingencies like:
- If you need a mortgage, you need to know of the monthly payments, and you need to have documentation that you are approved for a mortgage.
- The amount to be paid on property taxes
- Charges on homeowners insurance
- What the monthly upkeep could be on estimation
- If there is a homeowner’s association
- Condominium Fees
These estimations will help you create your price range in which you will fall into and use in the bidding belligerence. In as much as they are estimations, they need to be backed by facts from research you have done.
Once you have come up with this amount, you need to know that this is not the fixed amount you will use. You need to place your bidding price a bit lower than this amount to create flexibility in your bidding.
To win the bidding, you need to apply the following strategies to win:
1. Know your worth
After preparing for tender, you should know how much you can afford. You should avoid being driven into emotional buying as you will spend more than you may have or planned for.
Breaking the bank is an all-around poor decision that does not only apply to real estate bidding.
However, you should not let quite a small amount hinder you from buying a home you dream to live in. If you are having a hard time coming up with an amount that is suitable for you, you should enlist the services of a financial adviser or the advice of your lender.
2. Try to liquidate your money into cash
This will save the real estate agents the trouble of having to wait for your loan approval or the processing of your mortgage.
Cash is a form of payment that is most reliable to them, and this method has been adopted even in the places where the markets are hot ant the investors in these types of markets use cash almost always.
Moreover, you may find that your lucky stars have been aligned and you experience the rare cases where the sellers have cut the price a little bit so as they could take the cash instead of other forms of money.
As for mortgages, there is adequate time to acquire them after the conclusion of the deal.
3. Use a contingency plan if you cannot come up with cash
This should be a credible proof that you can meet the price needs for instance if you are waiting for loan approval.
Your lender could write you up a document to show pre-approval of the loan. However, you need to be sure of the credit as getting into a cash debt would be a terrible idea and you may lose the house of your dreams.
With this providing credibility, your chances of winning the deal are also raised.
4. Open communication with the sellers and listing agents.
This is a scheme to help you stand out from the pool of multiple offers. You could voice your interest and wishes here and use effective methods of communication, for instance, a phone call or a letter.
Moreover, some real estate agents have interest as to what will happen to the house, and you can voice out real plans via communicating with them.
5. Offer a shorter closing period
This may work to your advantage especially is the sellers are on a short time scale for instance if they have to move within a limited time.
You can make this closing period shorter for example by cutting or ensuring the inspection will take a shorter time for them to get time to move on sooner.
Moreover, loan preapproval and conditional approval from you lenders will also help shorten the closing period.
Another tactic to be able to match the buyers using cash and create a short closing period would be to first undertake in the mortgage process.
This scenario will be tapping into the seller’s motivation, and it will make them happy and forthcoming and eventually, open to your deal.
6. Try to lean your offer towards the seller’s side
This can be achieved by cutting on your conditions for the purchase of the house. The lesser the circumstances, the higher your attractiveness as a buyer, will be to the sellers.
This does not mean that you should purchase the house blindly. As a real estate agent you should get the facts on the property including any defects that it may have. Cutting the inspection period will show your satisfaction in the home for example.
7. Have a backup thought of the presence of other houses
This will help you to be decisive and especially to learn when you can walk away and drive you to walk away. You have freedom of purchase so you should not be afraid to turn your back on the deal.
There is always a point where you will be tested on your emotions; so yet again don’t buy on feelings which may lead you to breach your budget levels.
If driven by emotions, it will not be quite as much as an investment as it will be an impulsive purchase.
These guidelines will not only help you as a real estate agent to buy a home but also ensure the one you will be comfortable with both financially among your other needs.