When the real estate market lacks enough homes to meet buyer demand, there’s a trend that tends to emerge — bidding wars. During a bidding war, two or more buyers duke it out over the same property by going back and forth with higher offers.
Of course, the problem with bidding wars is that they can easily drive home prices up, and that’s what’s been happening in the housing market this year. But bidding wars can also be extremely stressful, and losing one can be disheartening.
It’s not surprising, then, to learn that 47% of home buyers feel anxious about entering a bidding war, according to a recent survey by Ally Financial. If bidding wars make you nervous, here are a few effective strategies to employ.
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1. Crunch the numbers beforehand
You don’t want to overspend on a home and struggle with higher mortgage payments than you can afford. Before you make an offer on a home, run the numbers to find the highest price you can afford. That helps protect you if you wind up battling it out with another buyer, because you know when you have to walk away.
2. Get pre-approved for a mortgage
Getting pre-approved for a mortgage is not the same thing as actually getting approved for one. But it’s a step in that direction.
Just as importantly, mortgage pre-approval sends a message to sellers that you’re not only a serious buyer, but that a lender has reviewed your finances and determined what loan amount you qualify for. If you’re battling it out with another buyer, but you’re the only one with a pre-approval letter in hand, that alone might give you a solid edge.
3. Appeal to your seller in non-financial ways
It’s natural for any seller to want to get as much money for a home as possible. But money may not be the only factor …….