HomePosts6 Ways To Win a Bidding War on a House
House with a sold sign in the yard. Read on for tips on how to win a bidding war on a house.

6 Ways To Win a Bidding War on a House

Estimated reading time: 9 minutes

Bidding wars may have cooled but they’re still a factor for many homeowners due to the low number of homes on the market. According to the National Association of REALTORS (NAR), homes averaged 3.3 offers in May 2023 and listed properties typically stayed on the market for just 18 days. If you’re among those battling for a house, here are six tips that may help you win a bidding war.

1. Submit a Verified Approval Letter with your bid

Verified Approval Letters help buyers show they’re serious bidders. These letters are a step above Pre-Approval Letters which state how much a lender may approve you for on a mortgage. That’s because Verified Approval letters are only provided after an underwriter has verified information such as 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 Verified Approved for a bigger loan than you need if you haven’t already, as you’ll see in tip number 2.

Get an initial underwriting approval with a Mr. Cooper Verified Approval, and receive an approval letter as early as the same day(if information is submitted by 2 p.m. PST)! It’s fast, free, and shows sellers that you’ve got one of the nation’s largest servicers behind your offer.   

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Buy now and we’ll drop your rate by 1% for the first year of your mortgage* Plus, we’ll give you up to $1,500 in credit when you refinance later.**

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 what your lender’s appraiser supports. 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, for example.

3. Have a guaranteed closing date

A third strategy is to use a lender who offers a closing guarantee. 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 by your contract closing date.

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 or 30 days after you apply and submit initial loan documents.**

** Guaranteed Closing Date must be at least 21 days for conventional loans and 30 days for VA and FHA loans after the date that you submit a complete mortgage application, purchase agreement, and all requested initial supporting documentation (including income/asset verification documents) to Mr. Cooper.  If the loan does not close on or before that date, (subject to important terms and conditions), you will receive a check equal to your first month’s principal and interest payment following loan closing. See Mr. Cooper ® Close On Time Guarantee full terms and conditions at https://www.mrcooper.com/get-started/home-loan. See the Mr. Cooper® Close On Time Guarantee terms and conditions below and watch our customer Jill’s testimonial here.

4. 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. 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.

Discuss the pros and cons of dropping any contingency with your real estate agent as skipping them could hurt you. For example, some homebuyers waived home inspection contingencies during the competitive 2022 homebuying season. But, NAR reported that many buyers also regretted dropping inspections.  

5. Add a time limit to your bid

This tip may help you avoid a bidding war altogether. In the hot pandemic housing market, Boston-area real estate agent Elias Papdopolous suggested 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 a 2020 interview with Boston.com, he advised that buyers should consult their agents for best recommendations on time limits.

6. Offer more earnest money

Many sources say that offering earnest money is a potential way to win a bidding war. If you’re not familiar with earnest money, it’s basically a deposit you put down on a house. Offering more money can be appealing because, under the right terms, the seller may be able to keep the deposit if the deal falls through. It may also signal that you’re a more serious buyer than your competition.

A note about buyer “love letters”

Some sources will say writing a “love letter”—or personal appeal—to sellers is a way to win a bidding war. However, many experts such as NAR warn against them. That’s due to the fact that love letters risk violating local, state, or federal fair housing laws. For example, under the federal Fair Housing Act, sellers can’t discriminate based on a number of factors, including a buyer’s race, religion, or familial status. If you write, “this house would be perfect for my family,” or include a picture of them, you’re revealing a key detail.

Whatever your bidding war strategy, discuss it with your real estate agent. With the right guidance, you may win the war—and a great house—while staying on budget.

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* 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 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.  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 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 loan application must be for a first lien, conventional, VA, or FHA mortgage loan product.  This offer does not apply to non-conventional, or non-QM 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 days for conventional loans and 30 days for VA and FHA loans 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 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 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.