How to Win an Austin Home Bidding War
1. Get Pre-Approved by a Reputable Local Lender
You will most likely be competing against cash offers, so you’ll need to have a Pre-Approval Letter from a trusted local lender. Realty Austin agents have great relationships with top local lenders that are trusted by listing agents to get the job done.
2. Waive your Loan Approval Contingency
Sellers usually accept offers that have the fewest opportunities for the buyer to back out. If you are fully approved by a reputable lender, you can safely waive your Loan Approval Contingency, making the seller more likely to accept your offer.
3. Waive your Appraisal Contingency
In a rapidly appreciating market, appraisals often don’t meet the contract price, which is one reason sellers prefer cash offers. If you have extra cash, beyond your down payment and closing costs, you can overcome this objection by waiving the Appraisal Contingency completely, or up to an amount you are comfortable covering out of pocket.
4. Waive your Inspection Contingency
Give sellers one more reason to favor your offer by letting them know that you are not going to ask them to make repairs or lower the price to cover repairs. If your inspector uncovers something you aren’t comfortable with, you’ll still have the opportunity to opt-out of the contract during your Option Period.
5. Increase your Down Payment
Even though your lender may only require 5% or 10% down, sellers like to see that the buyer has ample resources to get the loan closed. Increasing your down payment to 20% or even higher shows the seller that you are a strong buyer.
6. Offer the Seller a Lease Back
Most sellers haven’t identified their next home when they are selling their current home. And, even if they have, they would rather not move out of their current home before the sale actually closes. Offering the seller a lease back for a short period so they can move, or a longer period so they can find a home, will often give them extra incentive to take your offer. A smart buyer’s agent will identify the seller’s ideal moving timeline before making an offer.
7. Don’t Skimp on Option Fee and Earnest Money
Sellers like to know that the buyer has skin in the game. One way to show you are serious is to offer an above-average Option Fee and Earnest Money Deposit, and a shorter than average Option Period.
8. Consider an Escalation Clause
Some buyers are willing to go above and beyond any other buyer to win their dream home. In this situation, you can submit an Escalation Clause to exceed other offers up to your comfort level. Realty Austin agents have an attorney-approved escalation clause you can leverage in this situation.
9. Use a Cash Bridge Program to Make a Cash Offer
There are many creative financing options available to well-qualified buyers. Realty Austin agents have access to programs that enable qualified buyers to make a competitive all-cash offer (with the lender’s money), close fast, and then refinance into a permanent loan at favorable terms.
10. Work With an Experienced Buyer’s Agent
Now, more than ever you need an experienced, full-time agent who knows the market and is able to guide you through the process of submitting a winning offer, without overpaying. The market is changing fast, and you need an agent who is changing with it.
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