Even if this isn't your first time looking to purchase a home, buying a home in 2021 isn't like buying a home in normal times. Many people are working from home, which has caused an increase in the need for additional space for virtual learning or home offices and others are leaving once-popular city neighborhoods in search of more space and amenities in the suburbs. The exceptionally low inventory has created a market that is extremely competitive, so even if you find the home of your dreams, you're more likely to end up in a bidding war.
So how do you win a bidding war? Here are some steps to help you submit your strongest offer and increasing your chances of being successful.
Receive a Pre-Approval Letter
This shows you're serious about your home search and you're prepared to submit an offer.
Waive Contingencies or Sweeten Them for the Seller
You can do this by offer cash over appraisal, shortening the contingency timeline, or offering a leaseback free of charge for a brief period
Start Low, Bid High
offering over asking is becoming more common in today's market, so we suggest searching for homes that are $50-$75k below your budget in order to give you room to submit go in over the asking price.
Offer to Pay Some of the Seller's Costs
To make your offer more enticing to sellers you can offer to pay for expenses typically covered by the seller. These costs can include transfer and recordation taxes, along with title insurance.
Consider Making Offers Sight-Unseen
In a seller's market that is competitive, speed is key. If you're interested in a home but live far away or just haven't been able to tour it, you can still throw your hat in the ring. Video tours and 3D walkthroughs have made sight-unseen offers much more feasible during the pandemic
In today's market people are getting more creative than ever. According to The Penny Hoarder, recently a woman in Portland, Oregon added a little extra cheese to her offer. Donna DiNicola was looking for a new home for her 23-year-old son Johnny Barrett. DiNicola and Barrett found a home that they liked, and the asking price was $249,000. Homes in that area have been selling for well above asking; the home next door recently sold for $50,000 over its asking price.
When you’re in a bidding war, you need to make your offer stand out. DiNicola didn’t expect to win the bidding war, but wanted to get her son comfortable with the bidding process. They offered $26,000 over the asking price, then sweetened their bid by offering the owners a two-month, rent-free lease back option.
And, just as a lark, DiNicola added a kicker: free pizza for life from her restaurant in Portland. By accepting their offer, the homeowner would not only get $275,000 for the house, but also one free pizza each month, for life. It worked! DiNicola’s offer was accepted.