Housing inventory is low, and demand for homes is high. This is creating a very competitive market for homebuyers. According to realtor.com, some homes are getting 20 to 30 offers, and in some areas, they are selling for $50,000 to $100,000 over the asking price. This can be extremely intimidating for many buyers. To win the bidding war, it is essential to have a plan and support from a team that includes a realtor and mortgage loan officer.
Before you start looking at homes throughout New Hampshire, there are some ways you can prepare for a bidding war, all while making your offer more competitive. First, you should have your financing in order before you start the process. It would be best to have your earnest money deposit ready, know how much you can pay towards the down payment, and review your credit profile. Second, you should know what you are looking for in a home and a neighborhood. Lastly, one of the most important things you can do is find help from experienced real estate professionals. Your team should include a mortgage loan officer, a realtor, and a real estate attorney to help you get your home in New Hampshire.
You need to know how much you want to pay for a home and how much you can afford to pay. In the current market, these numbers can be very different. If you find yourself in a bidding war, you need to know how high you are willing to bid. If you hit that number and it is not competitive compared with the other offers, here are some tips to strengthen your offer.
Top five tips on how to win a bidding war:
Get Pre-approved – A pre-approval is one of the essential steps to getting approved for a mortgage. At MEP, our pre-approvals are fully underwritten, and they show that you are a serious buyer and an approved buyer. A pre-approval also speeds up the loan process, which can be the deciding factor for the seller when accepting an offer. You will already have most of the upfront work done with a pre-approval, and the rest of the process move quickly after that!
Waive Contingencies – Contingency clauses are important and allow buyers to back out of a contract if certain conditions are unmet. One of the most common contingencies is the mortgage contingency which lets you out of a contract to purchase a home if your financing doesn’t work out. Of course, you only want to do this if you are confident that you will be approved for a mortgage.
Escalation Clause – An escalation clause allows buyers to increase their initial bid by a certain amount each time another higher bid comes in. It is a good idea to put a cap on an escalation clause.
Write a love letter to the seller – Writing a love letter was unique, but it became more common and may have lost its charm. Basically, buyers will write a letter to the seller telling them why they are the right buyer for their home. But, according to Realtor.com, many buyers are still excited to write them.
MEP’s Property Inspection Waiver Program -The New Hampshire property you are looking at may be eligible for an inspection waiver. Our new tool allows LO’s to get a PIW before you make your offer which makes it much stronger, and you know how high you can go up in the bidding war without having to worry whether the house will appraise at the right price and if you will still qualify for the loan. Mortgage Equity Partners loan officers can walk you through this process but contact us first to have the information you need in advance of making an offer!
If, at first, you don’t succeed, keep on trying. If another buyer was chosen over you, that doesn’t mean some part of their transaction might not fall through, and if you have a competitive enough offer, you might end up being pleasantly surprised that you are next on the seller’s list!