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How To Win A Real Estate Bidding War: Strategies and Tips

“There are multiple offers.  It is a bidding war.”  No home buyer likes hearing this.  I can’t stand it.  I have helped hundreds of buyers purchase homes, and I consistently win bidding wars. I will teach you how to win a bidding war on a house.

So, if you are ready to learn some actionable strategy for how to win a house bidding war read on.  Oh, and offering a ridiculous price is not the focus of this post.  Instead, let’s 

This post includes:

  • What is a real estate bidding war?
  • What are the house bidding war rules?
  • An overall strategy to win a real estate bidding war
  • 11 Actions To Take When Writing An Offer To Win A Bidding War For A House

What Is A Real Estate Bidding War?

A real estate bidding war is when multiple offers have been submitted on a specific property.  Sometimes the listing agent will then reach out to those buyers and request each to submit his or her highest and best offer by a certain day and time.

Some buyers refuse to enter a bidding war.  That is a mistake.  If you like the home enough to make an offer, make your offer.  Just give the best offer you are willing to make.  If you don’t win you don’t win.  Just keep your emotions in-check.  Never pass on a house just because there is a bidding war.

What Are Real Estate Bidding War Rules?

 

Rules?  Hmm…that’s a good one.

There are no rules for the seller or the buyer.  Both buyers and many real estate agents think there are rules.  There are no rules. It’s the seller’s property to sell.  The seller can do what he or she wants.

A seller can ask for the highest and best which gives all buyers a second chance to submit something all the while more new buyers might be coming in with bids. Or, the seller can negotiate with just one or two buyers and momentarily leave the others on the sidelines   Or, the seller can just accept one of the offers and not give other buyers another chance.

Just two weeks before writing this I helped my clients write an offer for $291,000 with $2,000 in closing and an escalation clause to automatically increase our bid to a $302,000 purchase price against higher offers.

The agent called me and said, “We have four other offers, two are higher than your base of $291,000.  But we love your terms.  Would you do $293,000 and $2,000 in closings?”

I said, “That’s a deal.”

The terms in our offer were so strong that despite four other offers, and despite the fact, our escalation clause showed the seller we would pay up to $302,000 for the home we got it for just $293,000.

How did we get the seller to only want to speak with us and ignore the others?

Winning a home bidding war is easy.  Be smarter.  Be fast.  Most of all, you need to level the seller.  Be like a defensive lineman running at a quarterback as he tries to make a game-winning play.  Absolutely blindside the seller.

Read on to learn exactly what to do to dramatically increase your chances of winning a house bidding war.

The Most Effective House Bidding War Strategy

The key to how to win a bidding war in real estate is to be focused on one single thing: convincing the seller to select your offer.

You convince a seller to accept an offer by doing two things.  First, solve the seller’s problems.  Secondly, write a clean, easy to understand offer that creates zero doubt in the seller’s mind.  These two things work together to give a remarkably strong real estate bidding war strategy.

Win A Real Estate Bidding War By Solving The Seller’s Problems

To solve the seller’s problems, you need to know what those are.  Have your agent call the seller’s agent and ask.  I do not understand why more buyer’s agents do not do this.

There is really just one question you need to ask:  “Hey seller’s agent.  I just finished at 123 Banana St.  My buyers like it and might write an offer. Are there any terms that would be especially beneficial or helpful to your sellers?” 

That is the question.  Do not let the agent flub it and say, “just turn in your best offer.”  That’s junk.  You can’t work with that.  Bring up items to plant a seed in the mind of the listing agent.  These would be things like avoiding inspection repairs, post-closing possession for the seller at no cost, move-out timelines, closing timelines.   This will trigger the listing agent to remember something or say, you know, let me call you right back.

I made this call for the deal I described above.  I learned the sellers would love to have five days of post-closing possession.  I also learned they would love a 30-day close, and money was tight.  So, we gave the seller eight days of post-closing possession and a 28-day closing.  Also, we decided to buy the home “As-Is” meaning the sellers would not need to spend any time or money making repairs to the home.  This kept the seller from having any out of pocket expenses.

FYI, no one seems to understand what buying a home “As-Is” really means.  Buying “As-Is” is NOT buying sight unseen and is NOT waiving inspections.  All it means is you are telling the seller you will buy the house or you will not.  You are communicating to the seller you will not ask them to do a thing.  Sellers love this!  They now will not need to spend time, money, or energy on making repairs or finding contractors to do the repairs.

If the seller’s agent will not reveal any notably beneficial terms have your agent do some research and look for a problem.  Is there a pending divorce?  Is the home an estate sale and surviving relatives are selling the home?  At your walk through, did the home look like it was “getting away from the owners” as if there might be money problems?  Identify a problem and write an offer to solve that problem.

Win A Real Estate Bidding War By Making Your Offer Easy To Accept

Write an offer that is loud, noticeable, and just makes the seller want to say, “Yes, that one!”  Here’s how to do that.

Have A Familiar Lender With Street Cred With Local Real Estate Agents

The first step, your lender.  I am a real estate agent.  I promise you there are lenders I despise.  They are usually dot-com related, run lots of commercials, or a giant national bank.  Boo!  Junk.  When the seller and I are reviewing your offer you have two choices.  1) Your offer is accompanied by a letter from a lender I have never heard of or is so big that communication will suck, or 2) your pre-approval letter is from a major player with local offices, loan officers, in-house processors, and underwriters.

Option 2 will score more points and sway me, which will sway the seller every single time.  All day every day, option 2 is already ahead of you.

If you are thinking about buying a home and the market is competitive with low inventory you need to be approved with the best lender in your area.  You need street cred.  That dot-com mortgage broker who runs commercials constantly or your gigantic bank where you have your checking account has poor street cred with real estate agents.

Ask your real estate agent the right question, “Who is the most respected, trusted lender by real estate agents in my area?” Don’t let them just give you who they work with (though this is probably better than Goliath National Bank).  When your agent gives you a referral, ask that lender what their numbers are in your area.  Ask the lender how many new purchase home loans has the lender closed in your county in the last 12 months.

Truly, getting hung up on fees, or not wanting to turn your documents in to a new person, or a second credit pull, blah, blah, blah.  I’ve heard it all.  And it’s all lame excuses.  Do you want to win?  Remember, this post is about how to win.

Write Your Offer Crystal Clear…Crystal

Your agent needs to know what he or she is doing.  Your offer needs to be clean.  Clean! No junk in it.  No nonsense.  It’s all distractions.  Survey, for what?  You and your agent should be able to see yourselves if there are any encroachments using public records.  Get your own survey after you buy the home.

Short timelines, too.  Inspection timeline should be 10 days or less. Earnest money, turn it in within 3 business days.  Formal application for financing should be 3 days.  Closing date should be either what they want or relatively short.  Show these people you are serious and motivated.

Nothing in your offer should contradict some other part of your offer.  Contradictions create doubt and make us need to call your agent and ask questions, seek clarification, and possibly need to send a counter offer to clarify.

Why do I want to do that when I have these other competitive, easy to understand offers sitting on the table, too?  Why are you making it hard to accept your offer?  Write the offer so the seller does not question a thing and just signs to accept the offer.

12 Actions To Take When Writing An Offer To Win A Bidding War For A House

Now, time for some raw, straightforward advice for winning a bidding war on a house.  Take these actions and include these elements when writing your offer.  The more of these you use the more likely you will win the home bidding war.  These are the things I do as a real estate agent to help my clients win.

1. Call The Listing Agent And Gather Information

The first step to winning a bidding war on house is to learn what problems the seller is trying to solve.  Ask the listing agent what if any terms would be especially beneficial to the seller.  Mention things like a closing timeline or post-closing possession.  Ask what the seller’s plans are after he or she sells.  Where are they going?  Get as much information as you can get and use it.

This information will identify the seller’s problems.  Use what you learn and incorporate it into your offer.  Your offer should be solving the seller’s problems.  If the seller is buying and selling on the same day, giving the seller several days of post-closing possession could be very helpful.

Maybe the seller is relocating and starting a new job somewhere.  Finishing thighs up quickly may be helpful.  Or, maybe it is an estate and the surviving family members are all far away or unwilling to spend any money on the property.  Buying the home “As-Is” keeps them from hiring contractors they don’t know and spending that money to make those repairs.

2. Purchase The Home “As-Is”

In nearly all areas buying a home “As-Is” does not mean you are buying the home without an inspection.  You should be able to still have your inspections and terminate the deal if a meaningful undisclosed defect is discovered.  This alone is my secret weapon that has helped me win so many deals.  This is a remarkably effective action.

3. Purchase The Home “As-Is” And Waive Inspection

This is hard for a lot of people, but it can be done.  It’s all about how you use your time.  When you schedule your showing try to get a longer amount of time, like an hour or 90 minutes. Get in the home and if you love it immediately switch gears and start looking for signs of serious problems.  Consider bringing some with a lot of home maintenance or even a home inspector along with you for your showing.  If the home is older, be more cautious.

However, if the home is less than 10 years old, anything too serious would be pretty obvious and I’d be more encouraged to just waive the inspection. Psst…late in 2019 I bought a home that was just eight years old.  I waived inspection and bought the home for far less than their original listing price.

4. Have A Conventional Or Insured Conventional Loan – FHA, VA, and USDA loans scare sellers.

Each of these has an added part of the appraisal where the appraiser must certify the property meets “minimum property conditions.”  These really are not a big deal, but for some reason sellers get scared.  Most sellers will select a conventional or insured conventional loan over an FHA, VA, or USDA when all other elements are equal.

5. Be Pre-Approved

The norm is to turn in a pre-approval letter with your offer.  Have a pre-approval letter with a recent date and a purchase amount equal to or greater than your offer.  Also, use a local lender with an outstanding local reputation.  Use a lender that is known for being responsive, easy to work with, and gets things done.

6. Clean Offers – Leave out the junk.

Surveys, home warranties and other things are just distractions.  You and your agent should be able to pull enough information from public records to see if there is an encroachment on your property.  If the risk is low, don’t waste time on a survey.  Leave these added elements and distractions out of your offer.

7. Offer Post-Closing Possession

Even if the seller has not indicated they need post-closing possession give them some at no charge.  This gives some nice breathing room for the seller.  Offer 3 to 10 days at no cost.  Also, don’t withhold any of their proceeds during the post-closing possession period.

8. The Letter

Write a letter about why you want the house.  Three to five paragraphs and that’s it.  Also, look for common ground.  For example, if you go in the home and you see lots of stuff about being a firefighter and you or a very, very close relative is or was a firefighter mention this in your letter.

But, don’t just make something up just to come up with common ground.  You can also talk about why you love the house and how you will take great care of it.  Say absolutely nothing negative.  If you hate their wallpaper and will tear it down the first day, just keep that to yourself.

9. Price

Offer a good price.  Listen to the advice of your agent.  And remember, however much you ask for closing costs is coming off the seller’s bottom line.  Additionally, large closing costs concession requests cause many sellers concern.  Can this buyer really afford my house or is he/she just barely getting in? Yes, in a bidding war price is important.  Offer the highest price you are willing to pay for the home.

As for concern about overpaying for the home, just ask yourself what is the risk you will need to sell the home in 36 months.  If that risk is low, really go for it.  Pay the top of what the market demands for a similar home or even a few percentage points more.  Remember, it is a bidding war.  If something does happen and you need to sell it there will obviously be people there ready to buy it.

10. Goldilocks The Offer Expiration Time & Date

Offers have an expiration.  This is when you tell the seller you would like a response by.  Not too short, not too long, just right.  Be reasonable. Writing six hours after submission will blow up in your face.  Depending on the time of day, give the seller 24 to 42 hours to respond.

11.  Guarantee The Contract Price Or Offer Appraisal Gap Coverage

Most homebuyers are getting a mortgage which will require the home to be appraised.  By offering to cover an appraisal gap or guaranteeing your offer price you hedge the risk of a low appraisal.  You should know each of these circumstances could require you to bring more cash to closing the table.

Guaranteeing the purchase price in the contract is exactly what it sounds like it is.  For example, let’s say that you offered $300,000 for a home.  Regardless of what the home appraises for you are on the hook for the contract purchase price.  So, if the home were to appraise for only $275,000 you would still be contractually obligated to purchase the home for $300,000.

Appraisal gap coverage is different than guaranteeing the contract purchase price.  With gap coverage you are offering to the seller to cover a gap due to a missed appraisal.  Looking at an example will help explain this.

Let’s say you offer $300,000 on a house with a $20,000 appraisal gap coverage.  If the home appraises for $280,000 you would need to cover the gap up to the contract purchase price of $300,000 because the difference is $20,000.  However, if the home appraised for $290,000 you would only need to cover $10,000 to get to the $300,000 contract price.  On the other hand let’s say that same house appraises for $270,000.  In this instance you would cover the $20,000 gap but would end up buying the home at just $290,000 because you are only guaranteed a $20,000 gap.

If you choose to do either of these when you send over your offer and pre-approval letter also include a bank statement to illustrate you have the funds to meet these conditions.

12. Offer Submission And Follow Up

Make sure your agent doesn’t just submit your offer.  Along with the offer, your agent should write a brief email touching on all the strengths of your offer.  Then, your agent should call your lender.

Once your lender learns the offer is submitted have your loan officer get on the phone and call the listing agent.  Lenders are not even allowed to tell your own agent anything about you let alone telling this to a listing agent for a home you are bidding on.

Tell your loan officer he or she can share additional details about your file.  These could be your debt-to-income ratio, credit scores, employment history, or whatever else you allow.

As an agent, when I receive an offer I always call the lender and hear the same lame answer, “Oh, they’re solid.  If they weren’t I wouldn’t have written the letter.”  This is a common answer that tells me, the listing agent, absolutely nothing.  Stand out.  Here’s how.

If I had a lender call me and say, “Hey, you just received an offer from my buyers.  They’re FICOs are mid-700s, back end DTI is 29%, I have received pay stubs, last two months bank statements, they already have sufficient verified funds, and I have W-2s.  Oh, and they both have been with the same employer for 3+ years.”  Okay, now I am impressed.

Now, I am telling a seller, “This is rock solid financing!”

Have your lender send the listing agent an email, too, after the phone call.

Bidding War FAQs

When do bidding wars end?

A bidding war for a house ends once the seller has accepted an offer.  Some local real estate associations require listing agents to advertise with the property a multiple offer notification if the seller chooses to go through with that process.  The multiple offer process usually sets a deadline for the submission of offers.  But, the true end to a bidding war occurs once the sellers accepts an offer to sell the property.

I lost a bidding war.  Should I make a backup offer?

Homebuyers who lose the bidding war should submit a backup offer.  This should be done later the same day or the day after the seller accepts an offer.  Additionally, your real estate agent should continue letting the listing agent working for the sell know the offer is still valid.  Deals do fall through, and very few homebuyers will submit a backup offer.  At the  same time continue your home search by continuing to view other actively available homes for sale.

How is the bidding different from short sales?

A bidding war and a short sale are completely different things.  A short sale occurs when a homeowner is in default on the mortgage. In lieu of foreclosure the mortgagor (lender) agrees to allow the homeowner to sell even if the sale results in a lower purchase price than the mortgage balance.  These types of sales may or may not have a bidding war.  I encourage homebuyers of a short sale to complete extra due diligence about the nuances of a short sale.

Should I bid against myself?

Eager homebuyers should bid against themselves under certain circumstances.  If you have submitted an offer and are told there are multiple offers of the seller triggers a multiple offer process you should re-consider your offer.  If your original offer was your very best stick with it.  However, if you are willing to improve your terms or offer price re-write your offer.  It can be hard to tell if you are in first place or not.

How important is my Realtor® in negotiations?

A high quality Realtor® is important to successfully negotiate a home purchase in a competitive situation.  A skilled and savvy real estate agent knows the questions to ask the listing agent in order to possibly get more information to give you an edge.  Also, a great Realtor® will know how to utilize everything that you can do to form the best offer.  Lastly, a Realtor can talk about why your offer is superior compared to other offers.

How to start a bidding war on your house?

The key starting a bidding war on your house that you are selling is to attract the largest possible audience of homebuyers in a very short amount of time and give that audience an opportunity to bid up your house.  First, your home’s imagery needs to have very high aesthetic sentiment.  Basically, the photography needs to be excellent and the shots should capture a trendy, well-appointed, desirable home.

Secondly, is price.  A below market price is much more likely to attract lots of active homebuyers.  Third, have your agent stretch out as much as possible within the rules he or she must follow the marketing of your home and when home showings will begin.  Once showings do begin, utilize tactics to get as many people through the home as possible.  This can include making private showings short, allowing overlapping private showings, or holding an open house the first day the home can be shown.

Lastly, add some language to the listing that no offers will be responded to within the first 72 hours once showings begin.  This gives all interested buyers an opportunity to see the home.

Conclusion

Winning a bidding war is not hard.  All it takes is getting information and using that information to your benefit.  Write an offer the seller wants to accept.  Terms can be more valuable than that additional couple thousand dollars another buyer will offer.  Stand above the crowd.  Be loud.  Be smart.  Just write a clean, solid offer that solves all of the seller’s problems and leaves the seller with zero doubts about how easy and smooth it will be to work with you.  You will win.

The Quadwalls Team Of Realtors® In Northwest Indiana

About Quadwalls.com

Quadwalls.com is a real estate website founded in Valparaiso, IN dedicated to helping home buyers and sellers make better decisions when buying and selling real estate. We do this by giving clear, honest information to our clients based on what we have learned by completing hundreds of home purchases and sales.

How Quadwalls Helps Homebuyers

The Quadwalls Real Estate Team has some of the best Realtors® in Northwest Indiana. We are ready to help you find and buy your new home. Each of the Quadwalls Team Northwest Indiana real estate agents is ready to provide you with attentive, personalized, warm, caring service to help you find and buy a home. Whether this is your first or fifteenth home purchase each of us has the skills and experience to represent you. Start viewing homes for sale in Northwest Indiana today!

How Quadwalls Helps Home Sellers

Receive a free, remarkably accurate market valuation of your home by completing the Quadwalls.com Interactive Home Value Experience. Also, we post the real estate commission fee we charge on our website. Our fees for our full-feature home selling services are amongst the lowest in the industry. Click here to learn more about our full-feature home selling services and my answers to home sellers’ most common questions when hiring a Realtor to sell their home.

Is There Something Else?

Do you just have some real estate related questions? If so, feel free to contact us. We will respect your privacy. All conversations and inquiries are confidential. Just let us know how we can help.

About Author
Chuck Vander Stelt
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Chuck Vander Stelt

Real Estate Agent Northwest Indiana

Chuck Vander Stelt is the operating manager of Quadwalls.com, an award winning real estate agent based in Northwest Indiana, and a member of the National Association of REALTORS®. Chuck is a consistent contributor to the Quadwalls.com blog. Read Full BIO

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