There is nothing more anxiety-inducing than finding the house of your dreams, only to find out that so many people are after it, too. House-hunting can be a stressful activity—one that can take months if not years, and if you experience losing out on a home that you already got attached to and were sure was the one for you, it can take a toll on our emotions and well-being.
Thankfully, there are plenty of ways you can secure the house that you want. If you have your eye on a home that many people are also looking to buy, here are some tips to help you win the bidding war on it.
Get a pre-approval letter
If you have already been pre-approved for the best possible mortgage rates, make sure you have to ask for a letter from your lenders, one that details the following: The precise amount of your mortgage, your credit score, and bank statements as well as other official documents.
The letter should also note that you are serious about buying the property and won’t have trouble settling the mortgage once the home is given to you. A pre-approval letter is a key to winning a bidding war on a house because a seller could skip you in favor of others who have it.
While you should never throw caution to the wind and go over your budget when making an offer, the general rule of thumb is that sellers often prioritize those who have the highest offer—that’s the whole point of a bidding war. Here are some questions you need to settle when deciding on how much you will offer:
- What’s the highest budget you can allocate for the home?
- Who is your competition, and how much money are they willing to lay down? Consult with your agent to get an idea of the key insights. Your agent will also be able to provide you with the local market data to help you identify the best way to balance staying within your budget and securing the home.
Incorporate an escalation clause
An escalation clause is simply a provision that states that you will only put it in a higher officer if there is competition. It’s one of the best ways to protect yourself from overpaying if you’re not sure if other people are making an offer on the house. This strategy can help you outbid potential competitors without offering too much money upfront in case there are no other buyers after the property. Ask for help from your agent to help you write this up.
Make a personal appeal
Appealing to the seller’s emotion may seem like a dirty tactic, but you’d be surprised by how many homeowners are personally attached to their properties. If it was their childhood home or where their kids grew up, you can be sure that the property holds some sentimental value for them. They would want its next owners to love it just as much as they did. Here are some ideas about how you can make a personal appeal to the seller:
- Write a letter containing some information about yourself—what you do for a living, what your family looks like. This will help the seller humanize you and not just see you as a potential number.
- List down the reasons why you fell in love with the home. Is it the architecture? Is it some features like the fireplace or the staircase? Let the seller know what you think about their design choices and why you think they did a great job. Tell them how you envision you and your family growing in the new property.
- If your offer is on the lower side, explain why this is the case. A letter might be your best opportunity to tell them that you’re not intentionally lowballing them. You have valid reasons for not being able to make a higher offer. The seller might be able to empathize with your current circumstances, whether it’s because of medical bills or the costs of raising a child.
Know when to tap out and walk away
And lastly, it’s important to know when it’s time to tap out. If the price is starting to exceed any form of rationality and you know that it’s going way over your budget, you need to listen to the logical side of your brain and back out of the negotiations and know that you will find another house you will love just as much, if not more. Good luck!