Investing In The Right Real EstateInvesting In The Right Real Estate

You might find yourself in a bidding war if multiple parties are interested in the same home you want to buy. Your actions during the bidding war determine whether you buy the house and at what cost. Simple mistakes during the bidding war can cost you dearly. Below are four tips on things to do and avoid during your bidding war.

1. Focusing On the Bid Size

A strong purchase offer should have a healthy mixture of different elements. For example, you should:

• Offer a good purchase price
• Provide all the necessary documentation
• Include a mortgage-preapproval
• Increase your down payment above the traditional percentage

Don't make the mistake of relying solely on a big purchase price. What if the seller believes you lack the funds to see the transaction through because you don't have a pre-approved mortgage? Use pre-approval to add validity to your bid. 

2. Bidding Without Contingencies

As much as you want to win your bidding war, you should not forget that you might have to back away from the deal if you discover a deal breaker. You should set up your bid so that you can walk away with your deposit if that happens. The best way to do that is to include relevant contingencies with your bid.

For example, you should include an inspection and appraisal contingency. That way, you can abandon the deal if the inspection reveals a major structural issue or the appraisal is low.

3. Not Making Your Best Offer Outright

A true bidding war means every bidder is intent on making the purchase. In such a scenario, expect every competitor to present their strongest bid. You would make a grave mistake if you start with a weak bid, but that is precisely what some people do.

Consider a case where you present a $350,000 offer while every other competitor presents bids over $400,000. Even though you might expect a back-and-forth with the seller, they might just go ahead and accept the highest offer on the table. As such, present your best offer from the start to maximize your chances of winning the bid.

4. Not Consulting Professionals

Lastly, you make a grave mistake if you start a real estate bid without a professional realtor's input. An experienced realtor has handled multiple real estate transactions, some of which involved bidding wars. The realtor knows how to make your bid stand out. Expect your competitors to use professionals too. 

For more information, contact a local residential property real estate agent.