As more homes become available on the market, it's crucial for potential buyers to have a strategy in place to navigate bidding wars effectively. Homebuyers need to prepare by securing pre-approval for mortgages and determining their maximum budget. Engaging in bidding wars against multiple interested parties can drive up prices. Real estate experts suggest that understanding seller preferences, utilizing tactics like escalation clauses, and being ready to compromise on contingencies can improve a buyer's chances of securing their desired property without overspending.
"Win bidding wars by meeting seller preferences, not just price," says real estate expert Danny Johnson, owner of Danny Buys Houses. "Set a max bid to know when to exit, ensuring a financially sound decision."
Sellers usually prefer buyers who pay in all cash versus someone who will be financing through a mortgage. That's not always the case, but it's good to keep in mind when you're ready to buy.
An escalation clause is a section in a real estate contract that says a potential buyer is willing to increase their offer on a home if the seller receives a higher competing offer.
If there's a home that you're interested in, chances are you're not alone. That's when a bidding war could happen, and you don't want to go over budget.
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