Skip to main content
_FB_2018-Icons-finalized-cleaned-up_new_FB_2018-Icons-finalized-cleaned-up_newGroup 9
Back
Scroll to top

Tips for Winning a Bidding War in a Hot Home Market

Homebuying 4 min read
Hand holding keys handing to another hand

Ready to talk to an expert?

Trying to distinguish your offer on a home in a high-stakes bidding war? Consider adopting the seller’s dog.

It probably sounds unconventional, but Wendy Tanson, a Chapel Hill, North Carolina real estate broker, once saw a zealous buyer use this very tactic to secure a deal. “The buyer’s offer to keep the dog made it much easier for the seller to move,” Tanson says. “It just goes to show that creative tactics can go a long way toward helping buyers get the homes they want.”

But while being creative might help when you can adopt the seller’s pet, hang on to an unwieldy grand piano, or remove piles of clutter from the basement, few real-world deals open themselves to such unorthodox negotiating tactics. In most heated bidding wars, cash—not creativity—is still king.

Pad the seller’s pocket

One of the best ways to triumph in a bidding war is to cover the seller’s costs.

From transfer taxes to realtor commissions, the fees associated with home sales can be a drain on the seller’s windfall. If you want a house badly enough, try doing what many buyers aren’t willing to do: take on those expenses.

“You’ve got to throw in closing costs,” says Anne Humphries, a real estate agent whose firm serves the Florence, South Carolina market. “I’ve even seen buyers reimburse sellers for renovations that were done just prior to listing the home for sale.”

Besides covering the seller’s costs, consider automatically outbidding other buyers with an escalation clause. The way it works is that instead of telling a seller you’re willing to pay $365,000 for a home listed at $375,000, you say, “I’m willing to pay $365,000 for this home, but if you receive an offer for $365,000, I’ll pay $367,000” and so on until your bid escalates to a predetermined limit.

It’s kind of like eBay except you could end up paying more than other bidders, depending on the wording of the clause.

“Buyers who take on escalation costs are at an advantage when bidding gets intense,” explains Tanson. It’s also a win for sellers because they could end up getting more for a house than the highest direct offer they receive.

Lower the seller’s risk

Determined bidders with ample liquidity and unwavering faith in their dream home can waive their legal protections and transfer risk from the sellers to themselves.

According to home sales data collected by Redfin in 2013, ceding certain contractual contingencies is helping many bidders secure a winning offer. Of course, there could be consequences.

Consider the inspection contingency–you are free to waive this in an effort to woo the seller, but you’ll be on the hook if the home needs significant TLC.

The same goes for financing contingencies. You can waive these protections (which ensure you’re not penalized if you can’t get financing), but if you have trouble getting a loan, you could get be on the hook for the cost of the house!

“Making a clean, uncomplicated offer can attract a seller when other offers are rife with provisions,” says Tanson. “It can be a good strategy in a multiple-offer situation.”

Get personal

Adding a personal touch to your offer also makes a difference, especially when the seller is juggling multiple bids from equally qualified buyers.

How do you do it? By sending a letter. And yes, we’re talking about the paper-and-envelope kind.

While it might strike you as old fashioned, sending a seller a thoughtfully composed letter can sometimes curry favor and give you an edge over the competition. Is it manipulative? Maybe.

But this is a bidding war, and desperate times call for… well, you know.

As long as your letter sincerely conveys why you love the home, there’s absolutely nothing wrong with appealing to a seller’s emotions. Tanson relates an anecdote in which a prospective buyer, an electric train enthusiast, sent a letter to a seller, also an electric train enthusiast, explaining how he planned to keep the seller’s “train room” a train room. Ultimately, the buyer’s affinity for trains was a deciding factor for the seller, and the train room abides to this day.

“Knowing a lot about your seller” can often push your bid to the top, says Tanson. Sometimes, all it takes is a little research, a nice letter, and a little creativity to distinguish your bid from the rest.

Ready to talk to an expert?

Share:
First Bank’s Good To Know Logo
Sign up for our newsletter and be the first to know about new tips, insights, and products from First Bank.
First Bank may use this email address to contact you about products, services, and promotions.

You may be interested in...

Current 30 Year Mortgage Rates – South Carolina If you’re looking for current mortgage rates in SC, it’s a great time to buy! In a recent survey conducted by GoBankingRates, the state ranked 27th in the nation for the lowest average home mortgage. The study combined 30-year fixed, 15-year fixed, and five-year ARMs (adjustable rate mortgages) to rank each state by the average cost of a mortgage. Current Mortgage Rates in SC First Bank offers conventional home loans, including a 30-year fixed-rate mortgage. This types of mortgages are extremely popular among home buyers because the longer loan term allows for smaller, predictable payments. With First Bank’s 30-year conventional loan, your interest rate and monthly principal will never change, allowing you to budget more easily. If you plan to live in your house for a long time, a 30-year fixed-rate loan could be a good option for you and your family. What Affects Current Mortgage Rates in SC? 30-year mortgage interest rates vary depending on a variety of things, such as: Economic factors. Lending is riskier in some states than others due to unemployment rates, default and foreclosure rates and differing property values. State laws. States that allow recourse typically have lower mortgage rates. Recourse is the recovery of additional money from borrowers who default and the foreclosure sale doesn’t earn enough to pay off the mortgage. Size of competition. More lenders competing for your business means lower costs. Types of preferred loans. States with more military bases will likely see more VA loans, states with more rural housing might have more USDA loans, etc. Market conditions. An increase or decrease in home building and sales regionally or nationally can drive interest rates up or down. Government. Government policies like the Federal Reserve can dictate the fluctuation of interest rates. As you can see, there are a number of reasons why a 30-year mortgage rate in South Carolina can vary. The best way to find out what your interest rate will be is by speaking with a First Bank mortgage specialist. If you are ready to apply for a 30-year mortgage, you can find out your interest rate by starting an online application with First Bank. Loans subject to credit approval. ———- Source: Housing Wire: https://www.housingwire.com/articles/48165-this-is-how-mortgage-rates-vary-by-state/ 2 min read
What are 30-Year Mortgage Rates? If you are thinking about buying a home, you may be asking the question, “What are 30-year mortgage rates?” There are many ways to figure out the current average 30-year mortgage rates, but the best way to find out about rates near you is to ask a local mortgage lender, like First Bank. Get Competitive 30-Year Mortgage Rates at First Bank First Bank offers a variety of home loans with competitive mortgage rates, including a 30-year, fixed-rate conventional loan. 30-year fixed-rate mortgages are some of the most popular mortgages, as they provide homeowners with a fixed interest rate and lower monthly payments. Benefits and features of First Bank’s 30-Year Mortgage include: Your interest rate and monthly principal and interest (P&I) payments remain the same for the life of your loan Predictable monthly P&I payments allow you to budget more easily Protection from rising interest rates for the life of the loan May be a good choice if you plan to stay in your home for a long time Tips for Paying Off Your 30-Year Mortgage A 30-year mortgage does not have to be a 30-year commitment. Plenty of people pay off their mortgages early and you can too. Money Smart Guides provides some great tips for how to do it. Use tax refunds. If you get a sizable tax refund each spring, put it toward your mortgage. This could be the equivalent of making six months worth of mortgage payments at once. Pay extra early. The early payments of a mortgage go mostly to interest while the later stages involve more principal. Paying hundreds extra now can save you thousands later. Pretend to refinance. In other words, calculate how much it would require you to pay each month to pay off your 30-year mortgage in 15 years or 20 years and commit to it. Round up payments. Bump up your monthly payments to the nearest round number. You won’t notice the missing money now but you will when it shaves years off your mortgage. Note: some lenders penalize homeowners for prepaying their loan. Before you prepay your loan, it is best to research prepayment penalties in your state. Find a Good Place to Start What good are 30-year mortgage rates if you don’t find a 3 min read
Home Mortgage Calculator from First Bank A home mortgage calculator can help you determine your monthly mortgage payments. This will help you financially prepare for that future purchase, whether you are a first-time homebuyer or seeking a vacation home. You can even discover how much money you might save by increasing your mortgage payment with a calculator. Home Mortgage Calculators from First Bank Whether you simply want to know how much of a house payment you can afford or you are trying to determine if you should rent a home or buy one, First Bank has a home mortgage calculator that can help. With our home mortgage calculators you can: Determine How Much House You Can Afford – Home Mortgage Calculator What you’ll need to know: Term in years Purchase price Percentage down Interest rate Annual tax Annual insurance Decide Between Refinancing or Keeping Your Current Loan – Home Mortgage Calculator  What you’ll need to know: Loan amount Annual property taxes and insurance Term in years Interest rate Determine Whether You Should Rent or Buy – Home Mortgage Calculator What you’ll need to know: Monthly rent Yearly rent increase Home purchase price Loan amount Term Find Out How Much Money You Can Save by Increasing Your Mortgage Payment – Home Mortgage Calculator What you’ll need to know: Principal balance Interest rate Monthly payment Additional monthly payment Mortgages from First Bank First Bank offers a variety of home mortgage options,** including: Conventional loans—Fixed or adjustable rates. Jumbo loans—For higher property values. Government loans—Lower rates and closing costs. Professional loans—For physicians, CPAs, dentists, and attorneys. Construction loans—For land, construction, and home mortgage. To learn more about our home loan options or how one of our home mortgage calculators can help you prepare for the future, contact or visit your local First Bank branch. *Member FDIC. Equal Housing Lender. NMLS #474504. **Loans subject to credit approval. ——— Sources: Investopedia: http://www.investopedia.com/terms/i/interest.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186 2 min read
First Bank logo
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognizing you when you return to our website and helping our team to understand which sections of the website are the most popular and useful.