Buying a house these days can feel a bit like the frenzy of Black Friday shopping—minus the low prices. While these might not be ideal conditions, life doesn’t wait for the market to change. When you need a house, you need a house. So, let’s dig into some helpful house bidding war strategies to help make your purchase process as smooth as possible.
Top 5 House Bidding War Strategies
- Get pre-approved
- Lower contingencies
- Include an escalation clause
- Stay flexible
- Don’t give up if your first offer isn’t accepted
Get Pre-Approved
As you’ve started researching your home purchase, you may have heard of pre-qualification and pre-approval. Both are good to have, but only pre-approval will help you sweeten the deal with your seller.
Pre-approval is a preliminary loan offer made after a full review of your financial information. It’s good for up to 60 days, and it essentially lets sellers know that if they accept your offer, you already have financing lined up. If 60 days pass without an accepted offer, don’t worry. You can always renew your pre-approval, but keep in mind that rates change frequently. So, the amount you get pre-approved for when you renew could be different from the original estimate.
Lower Contingencies
Contingency clauses in your offer allow you to walk away with your earnest money* if the seller doesn’t meet the outlined conditions. Some common contingencies include selling your current home before buying the new one, walking away if the appraisal comes back lower than expected, and requesting repairs. While it’s good to protect your interests as the buyer, sellers tend to (understandably) favor offers with limited contingencies. If you’re having trouble prioritizing, ask yourself which contingencies are essential to staying within your budget.
*Earnest money is a deposit made to the seller that assures the purchase agreement is reliable. Usually, it’s 1–3% of the purchase price. This deposit will count toward your down payment and/or closing costs.
Include an Escalation Clause
When you bid on a house, consider leaving some wiggle room in your budget for an escalation clause. This clause sets the baseline amount you’re offering, but also includes the highest amount you’re willing to pay if someone bids above your offer. Keep in mind that house bidding wars aren’t like an auction with real-time back and forth. You just have to submit your best offer and hope nobody’s submitted a better one. An escalation clause can help you make a stronger offer, and you’ll only have to pay that higher amount if the seller proves there was a competing bid above your baseline amount.
Stay Flexible
In a big financial decision like a home purchase, it can be hard to stay flexible and still meet all your needs. But the more you’re able to accommodate your seller, the better your chances of winning when you bid on a house. Usually, that means being open to later closing dates to allow the seller more time to move out. After all, they’re just a person who is likely going through the same purchase process as you are for their next home. Remember the Golden Rule you learned in kindergarten? Treat others the way you want to be treated. Unlike in kindergarten, now it might just be the difference between buying the home you want or starting over.
Don’t Give Up
Speaking of starting over, there’s always a chance your bid won’t win in spite of your best efforts. Don’t let it get you down, though! It happens to the best of us, and all you can do is figure out what went wrong and do your best to fix it for your next offer. The right real estate agent can help you strategize ways to improve. Some common fixes include:
- Making a higher down payment
- Building your credit score
- Reassessing your wants and needs list
Any other tips for winning house bidding wars?
Maybe the real win in a house bidding war was the friends you made along the way. Actually, it’s how much you learn from each offer. Even when you lose, knowing what doesn’t work gets you that much closer to knowing what does. Through it all, let an accurate budget be your compass. Calculate how much home you can afford, the easy way, with our affordability calculator.
And don’t forget the training montage music. It helps, trust us.
House bidding wars are competitive, but we’ve got tips to help you nail your game plan. First up: Get pre-approved.
