Bidding on a House with Multiple Offers: A Buyers Guide

Have you ever made an offer on a house only to be outbid by someone else? If you have, you know that it can feel like you’re in the middle of “The Hunger Games,” competing to win the house you love. If you haven’t… you need to be prepared for a little tug-of-war. The good news is that although bidding on a house with multiple offers is common, it’s not impossible when you have the right strategy in place. It just takes some preparedness, compromise and a little creativity.

Here are eleven ways to help you win your dream home when bidding on a house with multiple offers:

1. Choose the Right Agent

Your realtor will be your guide as you navigate the (sometimes stressful) process. Find a trusted professional who has experience in multiple-offer situations and whose advice you can trust. It’s important that you have constant communication so you can be clear what’s happening at every step of the way.

2. Get Pre-Approved

Getting pre-approved for a mortgage loan is an important step that will up your chances of beating out other buyers. Bidding on a house with multiple offers can turn into a bidding war, which is nothing you ever want to happen, but you should always be prepared. With a pre-approval, you can show the seller that you can actually afford to buy their home. Your real estate agent can refer you to a reputable and trusted lender.

3. Provide Financial Info

In addition to the pre-approval letter from your lender, you can also share a financial information sheet with the seller that includes useful information about your financial situation. This can include things like: credit score, savings score, length of employment, etc. This extra information can be helpful in making a winning offer!

4. Power Up with Knowledge

Get to know the market. Find out if comparable homes in your area have sold for their list price (or for more). If more… how much more? How long are they on the market? Work with your agent to determine these answers before you start looking for a home so you know exactly what you’re getting into.

5. Offer More

Start off strong. In hot markets, often the best way to win the bid is simply by offering the most money. This is where market knowledge and research comes into play. And, if you can afford it, offer cash. Sellers like all-cash offers because of the certainty that the settlement will go through.

6. Limit Contingencies

Make things as little complicated as possible by waiving any unnecessary conditions for the sale to go through. Since sellers have the upper hand in a bidding war, they want offers that are clean and concise. Have a discussion with your agent about whether you should waive any contingencies to make the offer more attractive.

7. Be Flexible

The closing date can make a difference in a sale. Find out as much as possible about the seller’s situation and offer to be flexible with the closing date. For example, if you learn that the seller has children in school, have your offer include a closing date just after school ends so their kids can finish the term at the same school.

8. Add a Personal Touch

Take the time to write a personal letter letting the seller know why you love the home and how you can envision you and your family living your life there. Selling a house can be an emotional transaction; sometimes the seller simply wants to know that the home they have loved will also be loved and cared for by someone else. You never know, a heartfelt letter might be more important than a little more money.

9. Pay Earnest Money

Earnest money is one way to show the seller that you really want the home. After an offer is accepted, the buyer pays the seller earnest money (usually 1-3% of the sale price of the home). If the deal falls through for any reason not covered by contingencies, the seller gets to keep this money.

10. Consider an Escalation Clause

Offer an escalation clause which will allow you the opportunity to increase your bid (up to a certain amount) if another potential buyer offers more than you. Just be sure you set a reasonable cap and don’t let yourself get carried away. This little trick can keep you a step ahead of the competition and help you win the war.

11. Negotiate Delicately

If the seller chooses your offer, that’s great… but you’re not out of the woods yet. Be sensitive in your negotiations; be selective about what you plan to ask the seller to pay for or repair. Remember, they had other options… and they choose you.

If at first you don’t succeed, keep your head up and learn from any mistakes. Don’t be afraid of a little competition; your realtor is there to support you along the way and find the right home for you and your family.