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How NOT To Lose A Bidding War On Your Dream Home
Dated: April 17 2015
The spring home buying season is in full effect. But there is just one problem: The majority of America is reporting a tight supply of residential real estate in most price points of the market.
And no matter how much the demand is there and how much lenders are willing lend, it means little if there are no houses to buy.
As a result, the few houses left and fought over in bidding wars, leaving many borrowers without a house.
Here are a few tips to help win a bidding war:
Offer Full Price or More. Money is a major factor in a seller’s decision, but not the only one.
Eliminate Seller Paid Closing Costs. It is not full price if you then ask the seller to pay your closing costs. If you need to the closing costs covered, make sure your offer nets the seller at least what a full price offer would. This is a common mistake made by buyers. Don't offer less than list price AND ask for a seller to pick up your concessions as that is asking for a discount on top of a discount. Remember, as a buyer asking a seller to pay for closing costs, you are the one who needs the sellers assistance and money!
Large earnest money up front. Show the seller you are committed to buy the home. How "earnest" are you? A larger earnest money deposit shows that you are a serious buyer.
Cash is King. Go in with cash if possible to eliminate problems of appraisals and financing. Appraisals are a problem as prices are increasing. New regulations make it difficult for appraisers and banks to meet the market changes.
Closing date should match seller's preferred date. Buyers agent should ask Seller's agent what date the seller would like close on. Keep in mind that the seller has to move too!
If you are having an inspection, provide a statement that you will not nit-pick any items to re-negotiate price, except structural or mechanical failures. Inspections were intended to be a way for the buyer to make sure they were not purchasing a major problem. Too often this is now being used as a way to re-negotiate the price with the seller. Remove this potential concern for the seller.
If buyer is financing, have a well prepared Pre-Approval letter from a lender. Make sure it does not come across as a pre-qualification letter.
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