How to win a multiple bid situation

Competing in multiple bid situations can be exhausting. Falling in love with property after property and losing out each time takes its toll. But, not to worry! The experienced professionals at the Brooking Homes Team are here to help you rise to the top of the competition and finally get an opportunity to purchase the home of your dreams. Below are some of our tips for how you can win!

Be Prepared to Act Quickly

Get pre-approved for homes in your price range

Getting pre-approved verifies to a seller that you are actually able to afford the house you’re putting an offer in for. Your lender of choice will look the following documents of yours:

  • W-2
  • Pay stubs
  • Credit report
  • Bank statements
  • Tax return

Once your lender looks at these documents and decides you can afford homes in your price range, they can pre-approve you for a 90-day period. This can make you much more appealing as a buyer because there’s a greater certainty that the sale will close fast. Remember, as eager as you are to buy, the seller is just as ready to seal the deal!

Keep your schedule flexible

When you want to win a bidding war, you might have to make a few sacrifices. Even if that means rescheduling your weekly dinner plans with your best friend to schedule the earliest showing available. If they’re a true friend, they’ll understand that you’re doing what it takes to win the home of your dreams!

Make an offer ASAP

If you're worried about competition, there's not much time to deliberate whether this house is the perfect fit. Every second, minute, and hour is time that another qualified buyer puts in their offer. Therefore, if you love a house you've toured and it has interest from other buyers, it's time to act quickly and make an offer. Let your REALTOR know that you would like to act fast and they'll help you decide on strategies for your offer and will present you to the listing agent as the perfect buyer.

Put Your Best Foot Forward

Lose the contingencies

Contingencies, like a home-sale contingency, are good for you - the buyer, but could be a red flag to in the seller's eyes. Since your contingency might cause the deal to stall or fall apart. In the eyes of the seller, your contingency could brand your offer with the scarlet letter “C” and remove you from the competition entirely. If you’re facing tough competition, and you’re able to responsibly remove your contingencies, it can quickly strengthen your offer.

Make your best and final offer first

In a multiple bid situation, you’re throwing your hat in the ring with others who have competitive offers, which may exceed the listing price. Submitting your highest and best offer first will allow you to stand out right away. You shouldn’t assume that a starting offer will be negotiated because it’s likely to be passed up in favor of someone else’s higher price.

Gain a Competitive Edge

Add an Escalation Clause

If you’re in a multiple bid situation, you don’t know who you’re up against and what they’re willing to spend. You don’t want to $30,000 over the asking price when you could’ve won by offering $3,000 over. On the other hand, you can also lose out by not bidding aggressively enough. So what should you do? Want to out-compete other bidders, but not risk paying way more than you have to? Meet the escalation clause. Here’s how it works: Imagine you’re interested in purchasing a $300,000 home that has many other interested buyers. You may add an escalation clause to your offer to be competitive without overpaying. For example, you can add an escalation clause stating that you’re willing to beat all other offers by $3,000 up to $310,000 (the maximum amount you’re willing to pay). This way, you can beat the other offers, while only spending just enough to beat them. 

Write a "Love Letter"

Consider writing a personal letter, AKA a “love letter", to the sellers as part of your offer. Be sure to include:

  • Some background about yourself
  • What you love about the property in particular
  • A description of your future dream of living in the property
  • Clarification on any weak points of your offer that could use explanation

A "love letter" may not win you the house on its own, but if the seller personally connects with what you wrote, it may tip the scales and be used as a tiebreaker between you and an equally qualified buyer.

Cash is king

Sellers love cash offers because it speeds up the closing process and eliminates the risk of a deal falling through due to delays and hiccups with lending process. Therefore, if you're able to make a cash offer, you'll gain an advantage over other buyers.

Ready to compete?

Hopefully, you now feel ready to go out and put your most competitive offer and win that dream home. Reach out to Brookings Home Team at 605-691-3023 so one of our experienced Realtors can assist you in this journey.