Spring is the hottest time to buy a new home, and while that means a higher chance of finding your dream house, it also means there’s a good chance you’ll face competition on your bid. Tight supply markets across the U.S. lead to what is commonly referred to as a “bidding war” that results in properties selling at or above their asking price. In order to emerge the winner in a bidding battle, you can turn a critical eye toward important factors that affect closing a deal. Below are 6 extra steps you can take to win the bid on the house of your dreams.

1. Select the Right Agent

First things first, make sure your working with the right real estate agent as they will be your guide during the stressful bidding process. Aim to work with someone with experience in multiple-offer situations, whose advice and knowledge you trust, and who is willing to explain things every step of the way. Having the right agent on your side can make or break the deal during a tense bidding war.


2. Get Pre-Approved

Getting pre-approved for a loan significantly increases your chances of winning the bid on your dream home because it indicates to sellers that you're serious. Being that today’s mortgage market is still relatively tight, sellers worry about appraisals coming in low and loans not closing, making them weary of buyers whose loans aren’t set in stone. Getting pre-approved requires you to provide a verified credit score and income, which will ease seller’s worries as they’ll know you won’t have trouble financing the house.

3. Start with your Best Offer

The term “bidding war” may suggest you start low and counter often, however, the opposite is true. Be the first to make an offer and don’t lowball. Your best bet is to bid at or just below asking price to indicate that you’re serious. Making a generous offer right off the bat will benefit you by knocking low bidders out of the running. Remember, if you choose to bid over the appraisal value, you’ll have to come up with the extra cash yourself, as lenders and banks won’t help, if the seller does not accept an appraisal contingency.


4. Consider an Escalation Clause

An escalation clause indicates the amount of money you’re willing to add to your offer if other bids are present. For example, if the purchase price of a home is listed at $500,000, but you suspect it will increase to $550,000,you may include an escalation clause in your bid proposal that you’re willing to pay as high as $560,000, if you have the necessary funds. Your agent should have language approved by an attorney structuring a price escalation to include in your offer.

5. Consider Cutting Back on Contingencies

A contingency clause is used to make your offer dependent on certain circumstances, such as your ability to secure financing.  If you are confident in eliminating some protections the contract provides a buyer, you may waive them.  A better approach may be shortening contingency timelines where possible. Be sure to discuss all contingency protections with your agent before waving any contingencies or shortening the contingency periods in your contract offer.

6. Connect with Sellers

Connecting with sellers is a great way to make your proposal stand out above the rest. Sometimes, all a seller wants to know is that their home will be properly cared for. If you haven’t had a chance to do so, write a personalized note on why you’re bidding and include it as a cover letter to your proposal. This helps sellers see you as more than just an offer, which can make or break the deal, especially if there are multiple offers.  

The reality is that you may not win your first, second, or third bid on a home, and although it can be easy to get discouraged, keep trying, learn from your mistakes, and follow the above tips. If you’re ready to start your home search or put your house on the market, contact Janet McAfee Real Estate.