It’s the ideal situation for a seller, but a bidding war isn’t always so great for buyers. As a buyer caught up in a bidding war on a Northwest Arkansas or NWA property, you need some way to come out ahead of the competing bidders – that is, without offering a ridiculous amount for the purchase price. And there are indeed some effective tactics and strategies you can use. Here’s how to win a bidding war on a Northwest Arkansas or Northwest Arkansas property.
Have Cash in Hand
Without a doubt, one of the best ways to win a bidding war on a Northwest Arkansas property is to arrive with cash in hand. Nothing speaks as loud as green, but it’s not just the tempting sight of all that cash.
When you have cash, sellers know that they won’t have to wait for you to secure financing and that there won’t be the possibility that the loan might not even come through. They know you’re a serious buyer and have the resources, so they may even reduce the price a bit to get that fast cash. On average, having cash in hand can double your chances of winning a bidding war.
Or Have Your Pre-Approval Letter
Not everyone, though, is able to win a bidding war with cash. So the next best thing is to get a pre-approval letter from your lender and come to the war armed with that. This is different from getting pre-qualified and has much more clout. A pre-approval letter tells the seller that your lender has already underwritten your application, and the only thing still pending is the appraisal. Having a pre-approval letter will put you ahead of all the other bidders who don’t have one and who still have to go through the approval process.
Go Easy on the Concession Requests
Another way to win a bidding war is by asking for less in the way of concessions and contingencies. A seller just might be willing to take a lower offer from a buyer who is making fewer demands. For example, avoid asking for an extended closing or repairs to be made or for closing costs to be paid. It will just make your offer more attractive in the eyes of the seller.
Appeal to Their Emotions
It’s seldom done, but sending a Pre-offer gift to the seller delivered through the listing agent can be a nice touch and create a valuable connection. Make it something personal, but not expensive (small gift baskets work well) Include a note with: “Just a small thank you for the opportunity to view your beautiful home.”
You could also send a letter from the heart introducing you and your family and explaining why you love the home. (I can provide you with a template letter to get you started.)
Employ an Escalation Clause
Another good tactic for winning a bidding war on a Northwest Arkansas property is to use what is called an “escalation clause.” This clause will allow you to strengthen your position in a multiple-bid situation.
An escalation clause is an addendum to the contract that states that if other bidders make bids matching or topping your initial bid, you are willing to incrementally increase your offer up to a certain cut-off point.
From Realtor.com:
“For example, buyer Brown offers $100,000 for a home or piece of real estate. Her Realtor® adds an escalation clause that, in the case of a higher competing offer, will increase Brown’s offer in increments of $2,000 above the competing offer.
Her escalation clause goes up to a maximum of $110,000. If no other offers are submitted, Brown’s offer remains at $100,000.
If buyer Green offers the seller $103,000, then Brown’s offer would automatically escalate to $2,000 above that, bringing Brown’s offer to $105,000. If buyer Orange offers $111,000 for the home, then Brown’s maximum of $110,000 will be exceeded, and Orange will have the top offer.”
Such an escalation clause indicates that you have a strong interest and are a serious buyer, but will also allow you to walk away without obligation when the competition gets too stiff.
However, this is usually left until we are absolutely certain that we’re in a multiple offer situation. Escalation clauses will allow the seller to know your top offer and they may counter you at a higher number than your starting bid, if we’re not careful. Therefore, it’s best to save this until the List Agent says something like, “Send us your highest and best offer.”
Your Ally in the Bidding Wars
Really, though, these are just a few of the many tactics you can deploy to win a bidding war on a Northwest Arkansas property. You can also be flexible on closing, you can let it be known that you’re prepared to walk away, you can make it known that there’s a competing property you’re interested in. There are many successful strategies to choose from.
Most importantly, hire an experienced agent you can trust to negotiate hard for you, and submit a strong offer with a solid strategy.