It is every seller’s dream and every buyer’s nightmare. A bidding war on a property that you decide is “the one” can be one of the most stressful and nerve-racking positions for any buyer or investor. Although it is never a position that you want to find yourself in, there are things that you can do when you are going up against other buyers to win. As an expert real estate negotiator with plenty of experience in helping my buyers avoid or win bidding wars, I would advise you to take all of the following steps to protect yourself.
Check Your Emotions At The Door
Whether you are buying a home for you and your family or purchasing an investment property, it can be all too easy to get swept away with excitement picturing yourself as the new owner. Beware, that the more emotion that you invest in a listing, the more it will probably cost you. It is important to check your emotions at the door and see a property for what it is. While it is okay to identify how a property would fit into your life or portfolio, remember there is a lot that is unseen and picturing your life there is risky. The more you allow yourself to fall in love with a property, the more likely you are to keep raising the purchase price and the more leverage you lose in repair negotiations. Remember, there are plenty of fish in the sea.
Establish A Solid Ceiling
One of the best ways to protect your budget and avoid losing your shirt in a bidding war is to set a firm budget before you even begin looking at properties. If you will be requiring a mortgage to purchase the property this will be a bit easier because the bank will give you a very definite ceiling on how much of a loan you qualify for. However, regardless of how you plan to pay, you need to know how much you can realistically afford and how much you would prefer to invest in this property.
Communicate Your Value As A Buyer
When you do find yourself in a bidding war, it is important to know how to develop a competitive edge that doesn’t rely solely on your bankroll. Aside from just offering to pay a higher purchase price, here are some ways to improve your position:
Offer to cover some or all of the seller’s closing costs.
Write a personal letter to the sellers explaining your position and appealing to their sympathies.
If paying cash, offer a quick closing.
Increase the size of your downpayment.
Waive your inspection contingency.
Keep the home inspection time period as short as possible.
For some sellers, the only thing that will matter is the sales price but for many, using the above tactics will sway them your way.
Enlist The Help Of An Expert
You never know when you are going to find yourself in a bidding war and you never want to be in it alone. Not only is it free for you as a buyer to hire a real estate agent to represent you in the purchase of a property, but it can save you a fortune when it comes to the negotiations. When you hire a real estate agent with extensive experience like myself, you can also avoid many of the mistakes that cause buyers to end up in a bidding war. All the way around, you are better off by hiring a real estate agent when you buy your next property.
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Liz and Chase