When in a competitive bid war there are some basic steps to take in order to not pay too much for the house you are bidding on:
- Ask yourself, "is this really the house I want?" Sometimes you will be able to step back and ask this objective question and it will cool off your emotions and you can make a level headed decision about "how high should I go with my offer?"
- If you have a Credit Approval letter that is backed up by an Automated Underwriting Decision and your income and assets have been underwritten, your offer will generally be the one considered, EVEN if your offer isn't the highest and best! After all, your offer, if accepted, WILL close because there are less questions in the sellers and listing agents mind about your qualification.
- In the credit approval application process, I ask my clients, "what is your comfort zone for payment size?" I remind my clients of this number when they call for advice from me about "how high can I go in sales price and payment?". Maybe finding out that there IS additional income or soon to be retired credit card/car payment debt actually increases this comfort payment. It's good to check back with your lender to make sure you aren't overshooting your comfort zone in payment size.
- Rely on your Realtor! Armed with your credit approval letter and a qualified Realtor are your two biggest allies to successfully win a bidding war and NOT waking up the next day and say to yourself, "what have I just done?" Your Realtor will provide you with Comparative Market Analysis (CMA) information that allows you to bid up to the value of the home with confidence. Confidence is evident to a seasoned listing agent representing the seller and your offer can move up the ranks in the agents mind and be presented this way to the seller.
- Your Realtor will have tried and true negotiation tools at their disposal which might include but are not limited to: settlement dates which meet the sellers needs, large or non refundable earnest money, an escalation clause, not asking for the seller to pay closing costs, full price or over full price offer, etc.
- Breathe easy! Remember, if you are getting a loan, or if you are paying cash and ask for an appraisal to be done, the appraisal process will determine the value and you can be saved from paying too much for the property if you tie the appraised value to the final sales price.
Best of success to you in winning a competitive bidding war!