How to Prepare for a Bidding War

Some traits on your home wishlist present a more competitive buying situation than others. These are the things about a home that can’t be changed. For example, looking for a home in the best school district or in close proximity to highways and transportation will most likely lead to the question of how you can best prepare to win a bidding war.  

How to Win a House Bidding War    

A large part of the bidding war strategy is how much you are willing to offer. Your real estate agent is a pro at weighing market conditions, the seller’s position, and your comfort level to come up with an offer price strategy.  But the best price isn’t always enough to win. In this article, we’ll explain how to make your offer go above and beyond.  

The Seller’s Stance

Seller’s agents have just as much expertise in helping their client choose the best offer as your real estate agent has in making one. That is to say, they’re also weighing the price against something: the probability that the home will close. How to win a house bidding war incorporates acknowledging the seller’s perceived risk that, by accepting your offer, there will be no issues during the buying process. 

Take, for example, a scenario in which one buyer offers less money but is going to be putting 20% down on the home. The other buyer offers more, but they are only putting 5% down. Some sellers’ agents may advise that the buyer who is putting 20% down could be more financially stable and less likely to have financing issues during the process, so the seller should accept a little less money in exchange for the security of knowing the home will close. 

The scenario above describes a perception, but everyone knows there are no guarantees in looking at the situation this way. Maybe the buyer is barely scraping together the 20% down payment, and it could be that the buyer putting 5% down is most qualified to meet the monthly payment requirements. In other words, there’s always a risk, right? Actually, no. There is one way to guarantee that the offer you’re making is free of financing risks. 

Backing Up Your Commitment to the Offer Price

A guaranteed pre-approval is how you can prepare yourself to win a bidding war. This is when your mortgage banker joins the efforts of your real estate agent in helping you win the perfect home. 

If you’ve been researching the homebuying process, you probably know by now that sellers rarely take a buyer’s offer seriously if they do not have a pre-approval. But what is a guaranteed pre-approval? 

#1 Bidding War Tool: Guaranteed Pre-Approval

Having a guaranteed pre-approval means you’ve already been through the financing process. A mortgage banker has collected all your documents, a processor has organized your file, and an underwriter has reviewed and approved your eligibility. All you need is for the house itself to pass the qualifying requirements (i.e., appraisal value and flood certification), and you’ve got yourself a mortgage loan. 

If risk vs. reward is a top priority with sellers and their agents, then a guaranteed pre-approval will make your offer stand out as being virtually risk-free. The seller (who, remember, has been through the buying process before) knows that all the steps of obtaining a mortgage present slight chances of the home purchase being delayed or falling through. With a guaranteed pre-approval, they now know you have already completed the steps and are ready to close. 

Don’t Rely on Offer Price Alone

In the significant and sometimes overwhelming process of buying or selling a home, there’s one thing everyone wants, and that is peace of mind. With the advice of your real estate agent on pricing strategy and the partnership with your mortgage banker to secure financing, you’re one step closer to winning the bidding war. 

If you’re ready to get started on a guaranteed pre-approval, one of our mortgage bankers is ready to help.