If you live in an area where homes are selling for asking price or more, you could find yourself in a bidding war. Here are five tips to reduce your stress and come out on top.
Have your money in order. Do a solid budget analysis and know precisely how much you can afford to offer as a down payment and what your monthly mortgage payments would be. Be sure to add property taxes and insurance to your monthly payment. Next, get pre-approved for a mortgage, which will hold more weight with the seller than simply being pre-qualified.
Don’t be emotional. Doing the above-described homework should help you avoid getting emotionally tied to a house that you can’t afford. Save your bidding strategies to use on a house you can afford and win.
Know the neighborhood. Your real estate agent can supply you with recent sales prices on homes in and near your desired neighborhood. Research the area online. Visit nearby parks, pools and even nearby businesses to ask questions about the area.
Make wise offers. If you are in a seller’s market, a low offer may insult the seller and make further negotiations tough. Beware of offering too far below the asking price. You might also consider offer the asking price or higher in exchange for something else in your favor, such as leaving a refrigerator. While you ultimately may have to offer more money for the house, other negotiating points include: offering to pay some of the seller closing costs, agreeing to a closing date in the seller’s favor, offering more earnest money, or making your offer with no contingencies, if possible.
Pitch yourself as the new owners. Let the sellers know that you really love their home — how you’d like to see your kids grow up there. Some buyers will go so far as writing the sellers a personal letter. This can motivate the seller to work with you to close the deal. At the same time, however, be clear that you will move on to a back-up home, if necessary.