Homes in Northern Virginia have been selling fairly quickly. The average selling time was just 20 days in June. While our spring market saw the most activity, there is still a demand for many neighborhoods and price points. Fewer homes on the market means more competition for the available listings. These conditions often lead to bidding wars. Depending on the specific real estate market you are looking in, it isn’t a bad idea when searching for a home to look slightly below your maximum price range, so you have a bit of elbow room in case you do end up in a bidding war.
If you find yourself seeking to outbid other buyers for your dream home, you’ll need to act wisely. Here are a few tips for coming out on top.
Get Pre-Approval with a local, recognized lender. In a multiple contract situation other Realtors know that if you are working with a lender who has a good reputation and a good title company, you are more likely to get to settlement that someone working with a large, impersonal lender or an internet lender not familiar with local customs. A local lender is more accessible and will work with knowledgeable appraisers who know the dynamics of the specific geographic area and can usually get a loan approved within two weeks if that is important to the seller. Include a copy of your approval paperwork with your offer. While it isn’t guaranteed to get you a set of house keys, sellers will always prefer a solid offer with secured backing than a higher offer which can’t be proved.
Start out with your best offer and include an escalation addendum. The escalation amount should escalate by at least $2,000 to $5,000 or more and use a cap of 3% to 5% above asking price (your buyer agent can educate on sales price trends in your market area). If you are really serious about the home, offer a little more than the asking price initially. Offering the strongest earnest money good deposit you are comfortable with. And if your best offer won’t do, you can move on without wasting more time.
Cover Seller Costs Paying for settlement fees and Grantors tax or getting your own warranty for the home are also attractive perks to include in an offer.
Offer a Cash Purchase If you can afford it, this may help quite a bit. Sellers love a quick and easy sale, and as they say, cash is king.
Tell the Seller Why You Want the Home Many sellers are emotionally attached to their homes, and would like to know they have gone to good owners. Sometimes a personalized statement describing what it is about the home that you love may nudge a seller to your side.
If the seller needs to stay in the home after settlement, offer a FREE Rent Back for up to one month.
Other smart moves to make when going into a bidding war include keeping your home inspector on alert, and, if possible, eliminate contingencies regarding home appraisals, inspections, and financing. You’ll also need to keep in mind that if you bid over your approved loan amount, the additional expense will be out of pocket, as banks often will not loan more than the appraised value (local lenders and appraisers can usually make things work in most situations).