Buying a home involves both emotional & financial quotient. It’s not only about finding, and liking a home for its locality and interiors but also & most of all about ‘money.’ So, is buying a home on your radar? Here are some tips to bid on your dream home.
Research:
Be ready with all the details for your bid.
Do not bid when you are at the property site.
A thorough insight into the real estate market.
The demographic area of the property.
Hiring a solicitor would ease the process.
Here’s How You Start: To stick around your budget and not to throw caution to the wind under any state. Doing your homework before you begin your bidding war is a prerequisite. The things you or your real estate agent need to try and extract from the seller’s agent are; Is there a cut-throat competition on the home that is for sale? Your real estate agent should be able to give you local market data info with accuracy. It helps you to strike the right balance between saving money and securing a home. How long the property has been on sale, you should find about the same and strategize accordingly. However, no single strategy can guarantee you a win in a bidding war. Nevertheless, several steps are lucrative & help you compete;
Lucrative Steps:
Hiring a reliable real estate agent who is well organized & a good communicator.
Put across your offer price gently.
Be ready with your escrow deposit.
Reduce the inspection period.
In addition, escrow deposit after the inspection period.
Going all cash helps.
Handle diplomatically.
Description: As discussed, going all cash would make the seller think upon your offer price as it expedites their selling process and gets handy. There are people in the market who agreed upon the sale price, but later on, it gets hard for the seller to collect the money as they don’t deliver the payment on time. So, the sellers would be willing to pick those who can show them payment strategies. If your offer is contingent upon getting loan approval, the sellers might prefer conventional loans over federal loans.
Down Payment: All cash at once isn’t practical for many, so a large amount of a down payment would also attract the seller. Making a big earnest money deposit of nearly 1 to 3% shows your commitment, and the seller may be inclined to accept your price. According to a few real estate agents in today’s market, buyers are ready to make a 10% deposit.
Escalation Clause: If you’re confident enough about the offer price that you’re placing & want to strengthen it, you can go one step ahead and use an escalation clause. It’s an agreement that you put forward saying if the seller finds someone else ready to pay more, you’re willing to increase your offer to a certain limit. But, if another bidder offers more than your offer price, you will be out of the race. Don’t despair if you lose; you need to continue your search and keep a watch around. However, there would be far less competition when a property comes back on the market versus for the first time on the market.
Summation:
Acquiring mortgage pre-approval, paying in cash, constraining contingencies, and being flexible on closing the deal can improvise your odds in a bidding war.