How to Win a Home Bidding War

How to Win a Home Bidding WarBidding wars are a common occurrence here in the Chicago area market. They occur when multiple parties put in an offer on a single property more-or-less at the same time.

When this occurs, it is important that you have a solid strategy in place to put you in the best position to win a bidding war. Here are the steps you can take when faced with a multiple bidding scenario.

Have your agent establish a relationship with the listing agent - What is important to the sellers?

A multiple bid situation is a great time for your agent to establish a good relationship with the listing agent. Have your agent figure out what it is that is important to the sellers.

Often, money is not always the only important aspect of the transaction. The seller could have interest in an expedited closing process with ensured move-in upon closing, or maybe they will need to be able to live in the property for a number of months as a contingency. Identifying and appealing to these interests is a great way to get ahead of the competition.

The best way to find out what's important to the seller...? Ask!  It's in everyone's best interest.

Begin your bid with a fantastic cover sheet

Much like you would when applying for a job application, providing a cover letter along with your bid is a great way to communicate with the sellers.

Your cover letter is a way to appeal to the seller's interests in a written form, and add a personalized element to your transaction. The letter identifies you as more than just a bid number, but a genuinely interested and caring buyer willing to make the process as simple as possible for the seller.

Sellers like to feel good about the people who will be moving in there after them. Market Watch suggests adding a personalized element to your letter, such as attaching a photo of your family, can prove effective:

One buyer wrote about how a child’s bedroom in the home—with markings on the wall that chronicled the kid’s growth in height—was something that she wanted to replicate as her own child grew up.

Increase your earnest money

Money also talks. Upping the amount of earnest money you're willing to deposit is a great way to indicate your seriousness in the transaction.

Earnest money deposited is often between 2%-5% of the purchase price, but boosting it up to even as much as 20% really makes a solid impression.

Make it as easy as possible for the sellers

If you have the ability to makes the lives of the sellers easier, it can be used as leverage to boost your bid up above the competition.

Offer to cover the seller's costs

Sellers are often asked to provide the buyers a home warranty and are subject to state, county, and a portion of the municipal (specifically in Chicago) transfer taxes during the property transaction. You can offer to cover the seller's costs to help add a little extra incentive to the deal.

You can even offer to cover the cost that the sellers used for staging or cleaning the property. If it makes the lives of the sellers easier, it can be used as leverage to boost your bid up above the competition.

Offer to take care of the leftover furniture

It is likely that a seller isn't looking forward to the actual move-out process. So why not make it easier for them? Suggest that you take care of their moving "leftovers" to ease their moving process as an added incentive.

Suggest a flexible closing date

If timeline appears to be a concern for the sellers and you aren't in a time-sensitive position, why not suggest a flexible closing date? This can be very helpful for sellers who  are needing a little flexibility as they move in to their new home.

Talk to your realtor about an "as is" offer

On some occasions, it may be beneficial to buy the home "as is". While still having a contingency on a home inspection, you could potentially indicate that you aren't going to ask for repairs found during the inspection. Be sure and consult this option with your real estate agent before you go down this road, however.

Looking to buy a new home, or have questions on how to handle a multiple bid situation? We want to hear from you! Don't hesitate to send us an email or give us a call - we'll be happy to help.

Real Group Real Estate

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