Real estate agent offer hand for customer sign agreement contract signature for buy or sell house. Real estate concept contact agreement concept
Real estate agent offer hand for customer sign agreement contract signature for buy or sell house. Real estate concept contact agreement concept. (Green Shoot Media Photo)

So, you’re not the only one who’s made an offer. What now? If you live in a competitive real estate market, properties may regularly end up attracting multiple offers. When that happens, prospective homebuyers have to decide whether to proceed or move on.

Going forward may mean getting involved in a bidding war. At that point, a range of
strategies can come into play, from raising your offering price to waiving inspections. Here’s how to succeed in this tough bargaining situation:

BE PREPARED
Before making an offer, get a preapproved mortgage. This demonstrates to the seller that you are a serious buyer. There is a difference, however, between being prequalified and
preapproved. Being prequalified means a buyer might be eligible for a loan, while preapproval indicates that the buyer has been granted approval for a specific loan amount. You’re ready to proceed with closing.

START NEGOTIATING
Real estate experts can help buyers navigate this tricky landscape. Generally, however, those in bidding wars tend to raise the amount they’ll pay in hopes of earning an accepted offer. The approach carries notable risks, particularly if the home is already listed on the high end of the local market. Banks may not be willing to loan so much over asking. Other strategies include increasing the earnest money deposit or making a larger down payment.

Then there’s paying cold, hard cash. Making this kind of offer, if possible, will certainly help you stand out among others — and it’s highly attractive to sellers. They’ll have a fast closing without the usual financing uncertainties. Potential buyers should still insist on an appraisal and inspection, even if a mortgage lender isn’t involved.

OTHER STRATEGIES
Some opt to make their offer more relatable by including a letter. This can help illustrate to the seller why you’re the ideal buyer for their home. Just remember that sharing certain personal information may raise concerns involving the Fair Housing Act if the letter directly affects the decision to accept or decline an offer.

Others have chosen to include an escalation clause, which functions similarly to bidding on eBay. This allows buyers to incrementally increase their bids up to a predetermined cap. Experts warn, however, that this approach can backfire if a seller deliberately underprices a property to incite a bidding war.