When you are in the market to buy a property, you may expect some complications, such as securing financing or encountering a snag with a real estate agent. Bidding wars are among the many challenges prospective homeowners face in a market where there are more buyers than properties. While the real estate market was flooded a few years ago, that problem seems to be a distant memory in areas where demand is high. If you are looking at property in notoriously tough real estate markets, such as New York City, be well-prepared for a potential bidding war, and know how to fight the battle.
The first thing to keep in mind when facing potential bidding wars is to have all of your ducks in a row. Apply for a loan early, even before the controversy has a chance of starting. Prospective sellers want to see a buyer who has the actual money rather than the potential to get a loan. Make sure you are preapproved, or even better, have the cash in hand and ready to make the deal. Be assertive when you are making an offer, and start out fast and strong. Beware of lowballing, even if you say you are able to go up a substantially larger portion, because underestimating a property can create a dismal first impression. Show the seller that you value the property by making the right bid from the outset.
Be careful with your escalation clause in bidding wars. This indicates how high you are willing to go, so make sure you can actually live with the consequences if the high estimation becomes the actual amount. The escalation clause should be used only if there is a competing offer just below that price. Make it clear to the seller that you love the property, and establish a rapport with your knowledge of the property. This involves doing thorough research and getting to know every nook and cranny. Not only is this a good practice for winning a bidding war, but will help you decide if this is really the property you want.
Bidding wars can be grueling but rewarding if the result is that you obtain a dream property. Do your due diligence and ensure that this really is the best property for you and that you can live with the price you are offering. Once you are certain that the bidding war is worth it, fight until you win by approaching the battle prepared and with confidence.