9 Ways To Win a Bidding War

9 Ways To Win a Bidding War

The Birmingham real estate market is hot. And with double-digit showings from day one on the market - it’s essential to make your offer stand out.

Here’s a list of my tips for making the offer on your dream home a winning one!

1. Find a great REALTOR® to help you navigate the process!

Your best secret weapon is having someone on your side to advocate for you! Your REALTOR® should not only serve as your guide through the home buying process but present your offer in the best way possible. I love helping my clients navigate this crazy market and put their best offer forward!

2. Be financially prepared.

When it comes to financing your home, there shouldn’t be anything left to chance! You should not only know your budget and be pre-approved, but you should have all your documentation in order so when it comes to closing - you’re set! And if you are paying cash, get a proof of funding letter from your bank.

3. Offer above the asking price.

With a market as competitive as this, offering above the home’s asking price will almost always guarantee success. But, the critical thing to know is how much you should offer! Your agent should know what would be fair based on what comparable homes in the neighborhood have sold for relative to how long they’ve been on the market. And remember, it’s essential to know your limit and what you can realistically afford.

4. Ask the seller for less.

In real estate, there are certain things we commonly ask the seller to cover, such as your closing cost and a home warranty. However, in a multiple offer situation, it may make your offer more appealing to consider the seller’s bottom line. Think about it - if you and another prospective buyer offer the same price, but you state that you’ll cover the home warranty or a portion of closing costs, your offer could win out.

5. Use an escalation clause.

An escalation clause is an incremental increase in your offering price up to your maximum offer. For example, if a home is listed for $200,000, you can offer the asking price plus $500 above the other offer(s) up to $210,000. Escalation clauses can be tricky, so be careful and be clear if it is gross or net proceeds for the seller.

6. Be flexible.

Sometimes you have to get creative when it comes to offers. Some things may not cost you or the seller any money; they just make the offer better. Try to find out what the seller’s situation is. Do they need to sell quickly, or do they need more time? Being flexible on the closing date might put your offer ahead of the rest.

7. Limit the contingencies.

Yes, this is an option, but not something I’d recommend. There are two main contingencies: financing and inspections. If you have a home you need to sell before you can close on the next one, that’s something you can’t budge on. So that contingency is something you’d want to include in your offer.

8. Shorten the deadlines.

A short inspection period is appealing to the seller because if you were to cancel the contract after inspections the seller would have their home back on the market in a matter of days. Before you shorten the inspection deadlines, talk to the inspector you intend to use. Make sure they’re available on short notice and talk over things that concern you about the home. Remember, you want to make your offer more appealing, but you don’t want to inconvenience yourself!

9. Cover the appraisal gap.

When your offer escalates, or you offer above the asking price, you're running the risk of the home not appraising the agreed-upon purchase price. This opens up the negotiations again and might get the seller to reduce the price or meet you in the middle. However, in a seller’s market, the seller will most likely ask you if you have funding to cover the gap.

You’ve followed my checklist and presented your best and final offer - but it still wasn’t chosen. Don’t give up the home just yet! If you’re willing to hang in there, see if your offer can be the first backup offer, or keep an eye on the home and see if it comes back on the market. Things can happen, and the first contract can fall through. That’s how I got my house!

Guro Midtsund is a Realtor with eXp Realty, LLC in Birmingham, AL. This information is deemed reliable but not guaranteed.