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If more than one party is interested in bidding on a single home, the result could be a bidding war.
How do you win a bidding war? It won't be easy. First, you have to know the rules of your particular situation.
In some bidding wars, buyers submit their "best offers" in a sealed process. In others, buyers are allowed several rounds of bids, increasing their bids after finding out what other buyers have bid.
If you're in a best offer situation, you have to figure out what is the maximum amount you're willing to pay for the property. It may be the list price, or it may be something over the list. While you don't want to pay more than you have to, how high you go depends on how many other bidders there are. For example, if there are five bidders, you may have to pay 125 percent of the list price -- or more. If there is only one other bidder, the bidding war may not get that intense.
If you're able to have several rounds of bidding, you'll get a chance to see where the other buyers are with their pricing and contingencies. Typically, one or more bidders in a bidding war will drop out after the first round. If you can survive that, you'll have a better chance at winning the property.
One of the most important things to remember in a bidding war is that it may not be only about money. The sellers may want to stay in the house an extra six months, or they may want to move in six weeks. They may want an all-cash deal so they don't have to worry whether or not you'll get financing. They may want a "clean" deal with no contingencies.
Have your agent try to get as much information as possible from the sellers' agent so when you make your offer, it's as attractive as possible. |
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 Make your offer a clean one. Get pre-approved for your mortgage so you can eliminate the financing contingency. In a really tight situation, consider eliminating other contingencies as well.
Top it out. Instead of a price, offer to pay $1,000 or $5,000 more than the highest bidder. However, some sellers won't like that because they don't think it's fair.
Don't pay more than you think the property is worth, no matter what. Even if you think you'll live there for a long time, you might not. And you don't want to lose money on the deal.
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