As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing
7 Ways To Win A Bidding War In A Sellers Market In South Jersey
If you’ve been house shopping lately, you know just how difficult finding a single-family home in a sellers’ market in South Jersey can be. Try these 7 ways to win a bidding war in a sellers’ market in South Jersey:
1. Take a look at things from the sellers’ point of view.
To win a bidding war in a sellers’ market, you must appeal to sellers. Look at things from the sellers’ point of view.
Sellers are putting out a lot of money for real estate agents and closing costs. You won’t appeal to sellers if you bid less than what another potential buyer has already bid. Don’t offer a lower bid. Give the sellers a fair bid right off the bat.
If the good homes are selling quickly and you’re missing out, start looking at homes that have been on the sellers’ market in South Jersey for over four weeks. No one is placing bids on homes that have been overpriced, and those sellers are getting frustrated. This is the time to put in a bid on their home! They will be willing to take less than their home is worth and start dropping the price.
The bid that promises to close the quickest is the bid most sellers will choose, especially if their home is vacant. A vacant home is costly to sellers. The mortgage must continue to being paid, money must be spent on moving and then the sellers must rent or buy another home.
Since mortgage brokers can close the offer on a home in 2 or 3 weeks and banks take 4 to 6 weeks, it’s a good idea to get a home loan through a mortgage broker. Then you can let the sellers know that you can close faster than everyone else who is bidding on their home. After you place your bid, have your mortgage broker call the sellers and tell them you can close in 2 or 3 weeks.
If the sellers are still living in the home, your South Jersey real estate agent should ask the sellers for the date they would like to move. Set the closing date for that date. Sellers want to move on their schedule. If it will make moving easier for the sellers, offer to rent the home to them to help them transition.
You could write an escalation clause into the contract to help you win a bidding war, but be careful. An escalation clause can turn into a disadvantage for you! Some real estate agents will reject your bid and counter it with your highest stated bid. An escalation clause states that you will pay X number of dollars over the highest bid up to a maximum of X number of dollars if proof of the highest bid is shown.
2. Show sellers you are serious about winning the bid on their home.
Sellers dread having to pay out-of-pocket to fix a lot after inspections have taken place. Show the seller you are serious about your bid. Choose to opt out of the contingency that states the buyer can have an inspection done and back out of the contract for any reason during the inspection period and get their earnest money (or deposit) returned. This shows the seller you are serious about your bid, because you can lose your earnest money if you back out of the contract. If you do choose to opt out of this contingency, make sure something like this is in the contract: “if cumulative repairs are over X number of dollars, the potential buyer may still back out if the seller doesn’t do the repairs.” Giving the sellers peace of mind in exchange for a lower price will help you win a bidding war.
3. Send an approval letter with your bid on a home to win a bidding war.
A pre-approval or pre-qualification letter states that you can get a loan. An approval means you have already been approved for a loan. All you need is an address to on the loan.
Here is another reason to choose to work with a mortgage broker. Most banks won’t do the following for you. Ask your lender send to an approval letter with your bid to the sellers. This approval letter should have already gone through the underwriting process. Don’t send a pre-approval letter or a pre-qualified letter with your bid to the sellers. This will not appeal to the sellers to help you win a bidding war. Instead, put your bid in and ask your mortgage broker call the sellers’ real estate agent. Your mortgage broker will tell the sellers’ real estate agent that you have already been approved and they will explain why that benefits the sellers.
4. Put more money down on the home to win a bidding war.
A larger deposit or escrow money shows you have more to lose if you decide to back out of the contract. It shows the sellers you are a serious buyer. If you don’t back out of the contract, you’ll get back all that is in escrow.
5. Pay cash for everything to win a bidding war.
An all-cash bid in a sellers’ market appeals to sellers. Most will go with a cash bid over the highest bidder. Cash buyers appear serious because again they have more to lose. Cash buyers are able to close a deal in two weeks, which makes them even more appealing to sellers. When you can close in two weeks and you have a good mortgage broker and an approval letter, you are very appealing to sellers.
6. To win a bidding war, make your desire to purchase a seller's home personal.
If you’re just numbers on paper, then you’ll have to be the biggest numbers on paper to win a bidding war. Tell the sellers how much you love their home in a hand-written letter. Tell them how their home will benefit you and your family. Sellers want to feel good about the next family moving into their home.
Here's a very personal way to help you win a bidding war in a sellers market. Have your real estate agent ask the sellers what they want. You’re looking for something important to do for the sellers that will help them and increase your chances of winning the bidding war on their home. Who wouldn’t want to work with a buyer who cared enough to ask what you wanted and who was willing to make changes that would help them? This one question will make the sellers happy you asked and help you win the bidding war on their home.
7. Find homes before they hit the sellers’ market.
If you can find homes before they hit the market, you’ll save yourself time and money.
Drive around in areas you are interested in. Keep an eye out for remodeling or construction on existing homes. This could be an indication that owners are getting ready to put their home on the market. You could save money by offering to buy their home before they list it.
Ask your real estate agent to send cards to owners who have lived in their homes for 7 to 10 years in the areas you are interested in. Ask owners if they are interested in selling. Owners who are interested in selling will want to call your lender and verify that you are a real buyer, so make sure your lender’s contact information is listed on the cards.
Ask your real South Jersey estate agent if they have heard of any homes that will be listed soon. You might be able to view these homes before other buyers.
No, you don’t have to pay the highest price to win a bidding war in a sellers’ market in South Jersey, but it helps. Try these 7 ways when shopping for homes in today’s sellers’ market and win a bidding war on a great home.
Choose to work with Sam Lepore. He has experience and is active in the South Jersey real estate market. He knows how to help you win a bidding war in a sellers’ market in South Jersey.Contact Sam Lepore of Long & Foster Real Estate at(856) 297-6827 or email firstname.lastname@example.org today.
Sam Lepore is a Realtor with Keller Williams in Moorestown, NJ. Call him today at 856.297.6827 ....