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Friday, April 27, 2012

How to win a bidding war

How to win in a bidding war!
The latest Board of Realtors report released yesterday shows a 12.8% year over year increase in homes put under contract and a 4.1% month over month increase for the largest monthly gain since 2006.

As home buyer's enter the real estate market and find tight inventory in their price range, multiple offers are the norm for the past 30 days of activity in my experience.  The current multiple offer environment we are in is not creating extra revenue or profits for the seller's, but it is creating disappointment for buyer's who are not able to get the home they are bidding on.

Tips for buyer's to win in a bidding war are:
  1. Make sure as a buyer you are well prepared-a FULL credit approval letter (backed by an application with your lender, a credit report and credit analysis, and an automated underwriting approval) in hand, is a must.  I am receiving phone calls from 80% of listing agents asking if the letter of approval is backed by these things. 
  2. What does the Comparative Market Analysis (CMA) tell you?  A Realtor Professional will provide guidance to the buyer on how the home price stacks up against similar homes in the general area the home is located.  Fight off emotions until the offer is accepted.  During negotiation, keep your negotiations on an investment level, emotionally.  Facts and guidance from your Realtor will help you keep your offers realistic.  
  3. Don't be afraid to win the bidding war!  After you have successfully won the offer, your next step is to get the home checked out by a professional home inspector.  I am finding that 90% of home purchasers are paying the small price ($250-$500) of a professional home inspection to make sure this is the home they REALLY want.  There are financing and appraisal dates in the accepted contract that allow the buyer to exit the contract if they find the home isn't really what they wanted.