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5 tips for acquiring your dream home in a bidding war

When the real estate market is tight and you are looking for a new home, you may find yourself in the middle of a bidding war. This can be discouraging when you are ready to purchase the perfect home, only to discover you have heavy competition.

Do not lose confidence. Take the position that someone will purchase that house and it might as well be you. Here are five tips to help you along toward move-in day.

1. Obtain a pre-approval letter: Pre-approval is better than getting pre-qualified, which only verifies your income and what the bank is likely to lend. Pre-approval involves having a letter from your bank confirming your lender will underwrite your home application.

2. Back off on contingencies: When you know other sellers are making bids, make your own offer as clean as possible. Do not, for example, ask the seller to pay your closing costs. An attorney can help you with contents and wording and make sure that your offer complies with applicable contract laws.

3. Include an escalation clause: State that you are willing to increase your offer incrementally to a certain maximum if the seller receives offers that match or top your bid.

4. Be flexible on closing: Give the seller more time to move out or, if the house is vacant, offer to close sooner than later.

5. Write a personal note: This can win the day. Write a personal note to the sellers, telling them why you and your family have fallen in love with the house. Be open and honest but not verbose.

Even if none of these tips are sufficient to make you the winning candidate for your dream house, do not give up just yet. If the buyer who was selected made an offer that was well over the asking price, the deal may fall through, in which case your offer might be back on the table in no time.

 

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