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6 Ways to Win a Bidding War on a House

Bidding wars have jumped in the past year—so much so that the National Association of Home Builders reported that 45% of long-time home searchers haven’t purchased a home because they continue to lose out on bidding wars. Real estate agents around the country cite a mix of low housing inventories and low mortgage rates for the demand. If you’re among those battling for a house, here are 6 tips that may help you win a bidding war.

1. Submit a pre-approval letter with your bid

Pre-approval letters, or verified approval letters, help buyers show they’re serious bidders. Unlike prequalification letters which state how much a lender may approve you for on a mortgage, pre-approval letters state how much you’re definitely approved for. That’s because they’re only provided after a mortgage company has verified your income and assets. With this in hand, sellers may be more confident in your offer than another’s whose financing might fall through. You may also consider getting pre-approved for a bigger loan than you need if you haven’t already, as you’ll see next.

Get a verified approval with Mr. Cooper today! It’s fast, free, and lasts 120 days.

2. Have extra cash on hand

Bidding wars often make houses sell for well above their asking price. As The Balance explains, this may make a home’s selling price more than the appraised value that your mortgage company bases your loan amount on. That said, you may need funds on hand to pay the difference between the two. If this strategy isn’t ideal, you could alternatively shop for homes that are under budget, so you have wiggle room when negotiating.

Speaking of cash, a 100% cash offer may also help you win a bidding war. It may give sellers added trust that you’ll close on time because your financing won’t be an issue. This option carries risks, however, if you take shortcuts such as skipping an appraisal, survey, or home inspection that a lender would require. Steps like these can ensure a home isn’t overpriced or in need of expensive repairs that could hurt its value.

3. Have a guaranteed closing date

A third strategy is to use a lender who offers a closing guarantee. For example, the Mr. Cooper® Close On Time Guarantee guarantees your loan will close on time or your first month’s mortgage payment (principal and interest) is on us*. It’s available on eligible contracts with closing dates as soon as 21 days after you apply and submit initial loan documents. Guarantees like these can give both buyers and sellers added confidence in a bid.

Take note that not all closing guarantees are created equal. Some mortgage companies will only pay you a flat fee if your mortgage isn’t approved at closing.

See the Mr. Cooper® Close On Time Guarantee terms and conditions below and watch our customer Jill’s testimonial here.

4. Make a personal case with the sellers

A popular bidding war tip is to submit a personal letter with an offer. Sellers may choose you over others in a bidding war if they like why you’re drawn to their house. If you know the property was a family home, for example, you could explain why it would be perfect for yours, Millionacres suggests. Sellers may also appreciate knowing their home is going to someone who’ll value it as much as they did.

5. Be negotiable with contingencies

Contingencies are clauses buyers often add to contracts to protect themselves, but these can be hurdles for sellers. They can include stipulations that repairs must be made or that a home has to close on a particular day. Millionacres notes that you may stand out from the crowd if you’re flexible with these during a bidding war on a house. If you delay a closing date in a hot market, for example, sellers may respond favorably. You’ll be giving them more time to find their next home in the same tough market.

One strategy some homebuyers use is bringing a home inspector to showings so they can drop a home inspection contingency. These are called “walk-and-talk inspections” because the inspectors provide verbal feedback about whatever they spot during a walkthrough. They can save buyers and sellers the time of waiting for an offer to be accepted before scheduling an inspection or requesting repairs. Of course, this has major risks. You won’t get a formal evaluation and written report, so you could uncover expensive, undocumented problems later.

Discuss the pros and cons of dropping any contingency with your real estate agent as skipping them could hurt you.

6. Add a time limit to your bid

This tip may help you avoid a bidding war altogether. Boston-area real estate agent Elias Papdopolous suggests finding a house that has just hit the market and giving sellers 4 to 6 hours to accept a strong offer. If your bid is too good to lose, a seller may accept it without waiting to hear from competitors.

Bear in mind that your real estate market may vary from Papdopolous’. In an interview with Boston.com, he advised that buyers should consult their agents for best recommendations on time limits.

With the right guidance, you may win the war—and a great house—while staying on budget.

Tradenames and trademarks used in this blog post are the property of their respective owners. Nationstar Mortgage LLC d/b/a Mr. Cooper is not affiliated, associated, or sponsored by any of these owners. Use of these names and trademarks is not intended to and does not imply endorsement, but is for identification purposes only. Information provided does not necessarily represent the views of Mr. Cooper. Information is subject to change without notice.

The Mr. Cooper© Close On Time Guarantee Terms and Conditions

* The Mr. Cooper© Close On Time Guarantee offers assurance to customers purchasing a home with a Mr. Cooper home loan that the home loan will close on or before the contract closing date, or the customer will receive a check equal to their first month’s principal and interest payment (“Guarantee Payment”). The customer is still responsible for making all scheduled loan payments according to the loan documents. For NY customers, this may be subject to attorney availability and requires Mr. Cooper approval.

Eligibility: To be eligible for the Mr. Cooper Close On Time Guarantee,

(1) The customer must:

(a) submit a complete application for a purchase money home loan product directly to Mr. Cooper;

(b) provide a fully-executed purchase contract which must include all pages, addendums, and required signatures;

(c) provide all requested supporting documentation (including income/asset verification documents) needed to

make a loan decision and signed initial loan disclosures within 24 hours of submitting the home loan

application or within 24 hours of request by Mr. Cooper. All required documents must be submitted

electronically using Mr. Cooper’s online portal, Loan Tracker; and

(d) remain responsive with any further requests from Mr. Cooper and third party settlement service providers (such as appraisers and inspectors) in connection with the processing and underwriting of the home loan by providing any required documentation, access to property, or other response within 24 hours of request; and

(2) The home loan application must be for a first lien, owner-occupied, conventional mortgage loan product.

This offer does not apply to VA, FHA, non-conventional, or non-QM home loan products.

(3) All required appraisals and an acceptable home inspection must be received 10 days before the

Guaranteed Closing Date. Title work must be completed 5 days before the Guaranteed Closing Date. Sufficient funds to close must be verified 5 business days before the Guaranteed Closing Date. All required approvals from third parties (e.g. HOA, Condo certifications, etc.) must be received 5 days prior to the Guaranteed Closing Date. If home purchase is dependent on sale of home, proceeds from home sale must be received same day or before the Guaranteed Closing Date. For home loans to be secured by new construction, Mr. Cooper must receive a completed Final Inspection and/or certificate of occupancy at least 72 hours prior to the Guaranteed Closing Date.

Guaranteed Closing Date: The purchase contract closing date (“Guaranteed Closing Date”) must be at least 21 calendar days after the date that the customer submits the complete mortgage application, purchase agreement, and all requested initial supporting documentation (including income/asset verification documents) to Mr. Cooper’s Loan Tracker portal. If the home loan does not close on or before the guaranteed closing date (subject to these terms and conditions), the customer will receive the Guarantee Payment in the form of a check following the home loan closing. The customer is responsible for any tax liability related to participating in the program and should consult a tax advisor if there are any questions about their personal tax situation.

Important Restrictions: The Mr. Cooper Close On Time Guarantee will not apply if: (1) an existing home loan application has been submitted by borrower involving same subject property address as of May 19, 2019 (2) changes are made to the original closing date as documented in the purchase agreement;

(3) changes are requested to the loan amount, product, or terms requested within 10 days of the guaranteed closing date;

(4) there are changes to borrower’s income, employment, or debt from time of application to closing;

(5) closing date extensions are due to a delay in completion of new construction, improvements, or property repairs;

(6) either borrower or seller fails to meet purchase contract terms and requirements including seller-related delays,

(7) home loan transaction involves a Co-op, CEMAs, or requires two or more appraisals, and/or

(8) delay in closing is due to force majeure events including weather, or natural disaster.

Mr. Cooper reserves the right to amend, terminate, or withdraw the Mr. Cooper Close On Time Guarantee at any time without prior notice.