As your buyer’s agent, our goal is to keep you informed of all the best tips and tricks so that when it comes time to buy, you can move forward with confidence. One area that causes stress and anxiety for many buyers is learning how to win in a bidding war. It’s a difficult skill to practice until you’re actually in the middle of it!
Luckily, we have helped many buyers win their dream home even when going up against multiple other offers. There is no clearly defined answer of how to win in a bidding war. Every situation and scenario will be completely different, and call for different actions. However, knowing these options exist is half the battle.
The easiest way of how to win in a bidding war
If you’ve come here searching “How to Win in a Bidding War,” you probably don’t want to hear the obvious solution, but the biggest step may be to increase your offer! If you’re not in a competitive range, these other tips and tricks won’t help you. Assuming you are in a competitive range, these tips are designed to help your offer stand out from the other buyers.
How to win in a bidding war [without paying more money!]
Write a Letter
One of the first steps you can take to winning in a bidding war is to draft your letter. Think of this as a cover page for your resume. The sellers really want to know your qualifications, but the cover letter is an opportunity to create a personal connection so they can learn a little bit more about you.
Buyers typically take this opportunity to talk about themselves. If you just starting out, talk about how you’ve dreamed of finding the perfect home to start your family. If you have children, mention how excited you are to go Trick-or-Treating in your new neighborhood. If you have a dog, talk how you can’t wait to walk to the local park or host backyard parties with your furry friends in tow. The point is to create a common ground and help the owners to feel good about passing their home down to the next generation. Many sellers have a huge emotional attachment to their property. When it comes time to sell, they want to make sure it is going to a good owner that will enjoy it as much as they have over the years.
Here’s an important tip: DON’T use this as a chance to mention what you don’t like with the house (“We can’t wait to get started upgrading the kitchen” = bad!). Sellers know that you will come in and make it your own, but they appreciate when a buyer comes in with a respect and appreciation for the finer details of the house. Pretend you are a guest in their home and focus on what you like, not what you don’t.
Attach an Image
While this part isn’t necessary, we have found it is very helpful to include a photo of yourself/yourselves along with your letter. This doesn’t need to be a formal photo session from J.C. Penny, just a recent photo from your phone. The sellers are going to be sorting through hundreds of pages of paperwork (yes, hundreds). Most of these pages are in size 8 font and not exactly the most thrilling reading material. This may be the only photograph they see throughout the process, which will guarantee your offer stands out from the rest.
Raise Your Deposits
Another free tip on how to win in a bidding war? Raise your deposit amounts. This an easy arena for a seller to compare your offer with another. If your deposits are much higher than other offers, it shows that you are a serious and committed buyer. Sellers do not want to accept an offer from someone that might get cold feet. By increasing your deposits, you display upfront that you mean business.
The best part about this is that it doesn’t cost you any more money. The deposit amount does not affect the sale price of the house. Let me say it again, the deposit amount does not affect the sale price of the house.
As a reference, most sellers would like to receive 3-4% of the sale price as a total deposit. These are generally split between one initial small deposit and one substantial secondary deposit after inspections. In practice, we find most buyers offer significantly less than the 4% mark. Increasing your deposits to 4% or more can make an enormous difference in getting your offer accepted over other offers.
Find Out More About the Sellers
Money is not everything to some sellers. We know this is why writing a letter and attaching a photo can be so helpful. Learning more about the sellers is the key to ensuring your offer is accepted over other offers.
Before even drafting an offer, we will work on your behalf to find out as much as we can about the seller. It doesn’t hurt to even do a little bit of online snooping – sometimes Facebook can tell you a lot!
For instance, we may find out that a seller wants to sell so that they could move to Florida. If they haven’t yet found a house in Florida, they may need a longer settlement timeframe. In this case, we can discuss drafting our offer so that settlement is 60 or 90 days away, which may be more appealing than other buyers asking for a quick 30 day closing.
Consider an Escalation Addendum
For buyers, the escalation addendum is an absolutely essential tool to truly know how to win in a bidding war. In some cases, it can almost feel like an unfair advantage over other buyers that do not know they have this option.
The escalation addendum automatically increases your offer based on the other offers in play. This is ONLY used when there are multiple offers on the table. Take a look at our YouTube video explaining how it works: