How To Choose The Best Offer For Your Home During A Bidding War
Just recently, the housing market went wild because homes would sell as well as they are listed online. The bidding war became a widespread event.
Even though things are under control now, the housing inventories are still running low. The bidding war is still present, especially in the popular housing markets.
Right now, there is a real estate boom happening all over the country. Home demand is very high, making it a total seller’s market.
Median home prices all over the U.S. have been rising, and buyers are very motivated due to low interest rates. For sellers, this means that it is a great time to sell and get an excellent offer.
If you are a seller, you will likely get several offers and start a bidding war if you put your home on the market.
This is because, in many markets, there is not enough housing inventory to meet the demand. Therefore, there is a lot of competition among buyers.
But how do you choose the best offer once you start a bidding war? Keep reading to learn how.
What Is The Concept Of A Bidding War, And How Does That Occur?
In the real estate market, you will witness a high presence of bidding war. But what does that mean?
Well, a bidding war can occur when multiple buyers compete for the same property. They compete for the ownership of a new property by increasing the price bids. In some cases, they also push the price value way past the original value of the property.
Bidding wars can be commonly seen when buyers lock horns for a house, a business, or a specific building at a particular location.
There is a similarity between bidding wars and auctions. The bidding wars often occur at a breakneck pace. So, it is evident that the buyers are primarily prone to make emotional decisions during this time.
Now, the main question comes: how does this occur?
Let’s say a property has more than one potential buyer. In such cases, a bidding war can flare up. During the bidding war, prices kept rising. People start to bid over the price, and the last bidder takes home the opportunity.
Ways To Choose The Best Offer For Your Home During A Bidding War
So, how do sellers usually choose the best offers? In this section, we will talk about the things that you should consider during a bidding war.
Set A Deadline For The Bidding War
In a strong seller’s market, your home might be viewed many times, so many offers might roll in. Therefore, setting a deadline is essential so you have enough time to consider all options.
Setting a deadline incites a sense of urgency in the buyers, which means you will get severe offers from genuinely interested buyers. In addition, having all buyer bids roll in within the same period will allow you to review and compare all the offers.
This can help you make a better decision faster because you won’t be caught up in the “what ifs” of waiting for a better offer.
Review And Understand The Contingencies In Each Offer
Buyers will often have contingencies for the sale, and understanding these is crucial to ensure you are getting the best deal as a seller. If you accept an offer with many contingencies, you will not get paid until after the conditions are met.
Typical contingencies include the home inspection, the appraisal, and sometimes even upgrades. Some contingencies can become risky for sellers. Therefore, it is essential to work with a realtor or real estate professional to make sure these won’t affect the sale.
Know What A Good Offer Looks Like
When reviewing the bids, you’ll want to understand what a genuinely good offer looks like entirely.
These are some points that contribute to a reasonable offer:
- The buyer has a pre-approved mortgage loan or has proof that they can purchase the home with cash
- The buyer has presented contingencies that you and your agent believe are fair
- The actual monetary offer is within your expectations as a seller
Doing research on pages such as the Best Offer KC blog is a great way to understand the real estate market and know what to look for in an offer.
Be Ready To Accept The Offer
If you decide that one of the offers presented in the bidding war is good enough for you, be ready to accept it! Selling a house is a big deal, and walking out with the right offer is something you should celebrate.
Get Yourself Pre-Approved For A Mortgage.
Imagine you just found the best offer for the home you want, but you are unable to put the offer together. In such cases, you may lose the bidding war even before you start.
However, if you get preapproval, you are most likely to get the offer. This will help the seller to feel confident that you are backed up with a loan offer.
Getting a preapproval helps you understand how much the lender is ready to loan you. During a bidding war, the price often gets higher than the total loan amount. You might have to make up for the rest of the amount.
Wrapping It Up!
The real estate market is very competitive. So, when you are winning a bidding war, it takes more than just a high price. You need to strategically consider all the possible options before you finalize the offer.
Are you not sure what you are doing? Then, it would be amazing to work with a real estate agent. They have the expertise and experience in bidding wars. So they can easily guide you through the process and help you win the best offer.
Other than that, if you follow the tips, you will be able to choose the best offer during a bidding war.
Want to learn more about real estate? Check out our blog for more tips and advice.
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