If you are buying real estate in a sellers' market, it is easy to get caught up in a bidding war and overspend your budget. However, this doesn't have to happen because you can win a bidding war without overspending. Here are a few other tips and tricks that can help.
Limit Your Contingencies
Contingencies are conditions that must exist for you to buy the property. For example, you can say that you will only close the deal if you can sell your current home, the property inspection report doesn't raise red flags, or you can get your mortgage approved. Buyer contingencies are useful because they protect you from potential losses.
From the seller's point of view, however, every contingency you include increases the risk that the sale might not go through. Thus, having too many contingencies makes you unattractive buyers. If you must have contingencies, restrict the list to a few necessary items.
Prove Your Motivation
Most sellers love to deal with a motivated buyer. Convince the seller that you are a motivated buyer and you shall have won half the battle of the bidding war. The motivation helps because the seller knows you will actually see the purchase process through.
For example, you can prove to the seller that you need the house because you have accepted a job offer in the neighborhood and that you need to start working immediately. Another motivation is that you have already accepted an offer on your current home and you must move out immediately. You should also have all the papers ready and mortgage pre-approved.
Drop Concession Demands
Seller concessions are incentives that sellers use to make their property offers more attractive to potential buyers. For example, the seller may offer to pay some of the closing costs, repair defective parts of the house, or include some house contents (such as furnishing) along with the house.
Buyers sometimes ask for concessions, especially in buyers' markets, but don't go that route if you are in a bidding war. In a bidding war, you want to make everything as easy as possible for the seller. Don't make any concessions at all.
Lastly, it pays to be flexible and pander to the seller's demands as far as you can. For example, if the seller wants to close fast, be ready to close within their timeline. If the seller wants to remain in the house a couple of weeks after closing, agree to the request if it won inconvenience you too much. Such flexibility may make your offer more attractive to the seller than a high offer from an inflexible buyer.