When it comes to buying a home, mentally preparing yourself for a potential bidding war could prove to be the difference between success and failure!
Imagine coming across the home of your dreams. You run the numbers and confidently make a bid. Now imagine someone else feeling and responding the same way and submitting a competing bid! Surprisingly, this happens more often than one might think which is why preparation before getting into a home bidding war is imperative. With that in mind, here are some key tips on how to provide a winning bid when buying a home.
Get your mortgage pre-approved
In today’s market, any savvy potential home buyer knows that doing their home loan homework and starting the process with qualifying for a home loan is a smart move to make. That said, an even smarter move is aiming to get the jump on other bidders is by taking things one step further and getting that loan pre-approved if possible. While most bidders will enter the fray when they qualify for a home loan – meaning they’ve simply ticked all the qualifying boxes when it comes to their income and credit history – if you are able, coming in with a pre-approved and already underwritten loan pending final appraisal will go a long way to showing the seller how serious you are and that your bid is securely backed up by a reputable home loan provider.
Keep the sales terms and conditions to a minimum
Every quest for buying a home includes a fair amount of negotiation between the seller and the buyer, whether it be over repairs that need to be made by the seller before transfer of ownership takes place or discussion around who pays for which of the transfer fees and so on. If you are able, keep in mind that most people don’t enjoy terms and conditions and home sellers are no different. Therefore, if you really want to win in a bidding war, be sure to keep any sale terms and conditions to a minimum or do away with them all together. This will definitely put you in a more favourable position (and light!) with the seller.
Employ the use of an escalation clause
Simply put, an escalation clause is an addendum added to the sales agreement that could prove very handy if you do find yourself in a bidding war for a particular home. This clause entitles you to raise your bid by a certain amount until you reach an agreed upon “bidding ceiling”. For example, if you submit a bid of R2.5 million, you could include an escalation clause that gives you the option to increase your bid by R50 000 whenever another bidder outbids you. The clause remains in effect until you reach your bidding ceiling, such as R3 million in this instance, or someone else bids over R3 million. What this clause ensures is that you remain the top bidder for a prolonged period of time as well as top of mind for that of the seller.
Remain flexible
If you do find yourself in the position where you may be potentially outbid, try step away from the figures and show the seller that you are keen to be flexible when it comes to the sale by whatever means possible (within reason though!). For example, offer to give the seller more time to move out or offer to move in sooner and pay occupational rent if the house is standing empty. At the end of the day, aim to come across as accommodating and willing to go the extra mile come sale time.
Be relatable / personable
This tip could definitely be viewed as the (potential) cherry on top! Most of us know that in a world of impersonal communication, that extra time taken to convey a personal touch or make oneself relatable can go a long way to endearing ourselves to others. If you find yourself in a serious bidding war, it definitely doesn’t hurt to reach out and approach the seller in a personal way. By taking the time to call or email them and expressing how much you love their home and how much it would mean for you and your family to live there, the seller could be more inclined to view you as more than just a bid and therefore view you in a more personable and favourable light over someone else.
It’s important to remember that winning a bidding war often involves more than just submitting the highest bid. Bidders often forget that sellers are human beings who, more often than not, are attached to the home they are selling in some way, so treating them as such could give you a competitive edge! That said, by keeping these tips top of mind if you do enter into a bidding war, you could help your chances and might just give you the edge you need to secure that dream house when the war draws to an end!
