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Worried about bidding wars? Here’s how to outsmart your competitors

Homeownership Program

Author: Yvonne McFadden

The competitive nature of the housing market in Arizona is the buyer’s biggest nightmare. Right now, finding the ‘perfect home’ is almost an impossible dream. We are seeing homes stay on the market for not more than 10 days, and that’s a stretch. Bidding wars between desperate buyers and hungry investors in Arizona is just crazy, and that is an understatement. Ultimately, it is up to the seller to decide which offer is the best and who’ll close the deal.

Understanding Bidding Wars

If the term is new to you, a bidding war is a situation where two or more prospective buyers make offers on a home, and the seller has to decide which is the best offer. This decision is often easy to make when one offer is more attractive than the others.

However, in instances where multiple buyers have made almost similar bids, sellers have to make a difficult decision, therefore, buyers are forced to up their offers in order to outbid one another. That is quite common in highly sought-after neighborhoods.

To improve your chances of winning a bidding war, you have to have an edge over the competition. Here are a few tips that could help.

  1. Get Preapproved

Moist sellers will want to see your pre-approval letter in order to start the negotiation process. This letter proves to the sellers that you as a buyer are capable of obtaining financing. That shows the seller that the lender has done his/her due diligence and you’re fully capable of financing the purchase. Ordinarily, a preapproval takes much longer than a prequalification, but it is well worth the wait.

  1. Offer to pay in cash.

Offering an all-cash deal is a great way to get ahead of the competition. In actuality, this is where the investors are winning in the bidding wars as they offer sellers an all-cash deal. That’s something sellers cannot resist? And it is understandable! Cash bids are advantageous because they eliminate the need for a preapproval process. If you’re not capable of financing the entire purchase with cash, a good substitute is placing a large down payment on the house. That would make your bid more attractive and increase your chances of getting approval.

  1. Remove contingencies

While this move could be risky, it speeds up the process, helping you get ahead of the competition. Contingencies in purchase contracts help to safeguard buyers from losing money if the deal falls through. However, in a competitive bidding situation, removing some or all of such contingencies can push your bid to the top of the list as the seller may like to avoid the drawback of a lengthy inspection. Still, it’s advisable to weigh the risks before making such a move to avoid buying a house with serious flaws.

  1. Make a higher offer

In a bidding war, money is essential. Making a higher offer on a home can increase your chances of winning the bidding war. The amount of competition you have should determine how much you choose to add to your initial offer, and your real estate agent should be able to provide you with some helpful insight.

  1. Write a personal note.

While money holds some sway, home sellers can be moved by the personal notes of potential buyers. Here, you can explain why you want to buy the house and how much it matters to you and your family to have a home in that location. Never underestimate the emotional pull of words.

Conclusion

Bidding wars in Arizona can be long and frustrating, but knowing the proper steps to take would increase your chances of getting your dream home despite the competition. Again, regardless of how tempting it may look, always remember to stay within your budget.

 

References

https://www.rocketmortgage.com/learn/8-tips-for-winning-a-bidding-war#:~:text=Find%20Out%20If%20The%20Sellers%20Are%20Accepting%20Backup%20Offers&text=Match%20the%20competing%20offer%20or,Agree%20to%20waive%20some%20contingencies

https://www.forbes.com/advisor/mortgages/bidding-war/

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