When buying a rental property, location is an essential feature to consider. Savvy investors know that, which is why prime realty is often swept off the market quickly. As a result, home prices are now reaching record-breaking highs. Nowadays, vicious bidding wars are commonplace for properties that are still reasonably priced.
Unfortunately, homeowners can only make one sale, which leaves many investors in the cold. Read till the end if you’d like to learn how to pull ahead of the competition.
Prepare the necessary paperwork
When you’re ready to put in a bid, the first thing you need to do is get your paperwork in order. Not only does this action save you valuable time, but it also makes you look like a serious buyer. For example, proof of employment and income statements that show you can afford the house are handy to have with you.
If you can, get a pre-approval. Some people might view it as an unnecessary waste of time and energy. On the contrary, it shows the owner you mean business and can afford to purchase the contested house. The best thing about getting a pre-approval is that it doesn’t affect your credit score.
Pay attention to your presentation
Another typical mistake buyers make that knocks them out of the ring is poor presentation. You need to outshine the competition if you want a leg up in a bidding war. That means when you’re sending in your official offer, you need to ensure it is clear and concise. Remember that real estate is a competitive market, and the seller most likely has to read through several applications. If your offer is too long or unappealing, your application might get tossed out without a second glance.
However, it would be best if you didn’t forsake personalization for the sake of brevity. Give the seller a reason to sell to you by finding a connection. Explain why you want to buy the house. Perhaps one of their art pieces spoke to you, or you appreciate how they decorated a particular room. You need to send in a well-written and memorable letter.
Go above the asking price
Real estate is not like a shopping mall where what’s on the price tag represents how much you have to pay. When it comes to realty, property prices are always open to negotiation. Like you, the homeowner is looking to make as much profit as possible. So it’s not unusual for the lucky buyer to be someone who went above the asking price. In some instances, houses go for 10 – 15% above the asking price.
When you send in your offer, don’t be afraid to make it clear you’re willing to add a few thousand bucks. It’s a bidding war, after all. However, that doesn’t mean you should feel pressured constantly to top the seller’s offer. It would help if you weren’t quick to commit more than you can afford.
Ask the owner to take the home off the market
There are some scenarios where you feel you’ve got the price in the bag. You and the homeowner hit it off, and they’re seemingly leaning towards your offer. But until closing, where the title exchanges hands, nothing is in writing. And some interested buyers have found themselves back at square one when homeowners change their minds at the last minute.
But you can avoid that heartache by offering to pay extra and remove the house from the market. By taking the apartment off other listings, you effectively cut the legs off the competition. Once the homeowner agrees to stop taking offers on the house, you reduce the chances of someone else outbidding you.
Put yourself in a favorable condition
A common reason homeowners are apprehensive about selling to you is to attach contingencies to your purchase. In other words, you let them know that certain things have to fall into place before you can buy their house. For example, you might let the seller know that how quickly you can pay up depends on the sale of your house. Although giving a complete picture seems like a good idea, it might cause the owner to regard you warily.
As highlighted above, homeowners are looking to make a profit too, and without a sale, they can’t do that. So they will prioritize offers that seem like a sure bet; thus, if your request seems reliant on too many external forces, your chances of winning the bidding war drops.
Offer an incentive
Sellers don’t always prioritize money when listing their homes. Sometimes they value patience. In some instances, homeowners might put their homes on the market months before they’re ready to move. In such a scenario, a buyer looking to renovate in a week wouldn’t be the best fit.
If you can afford to wait, emphasize your willingness to let the homeowner and seller move out when they’re ready. However, if you can’t forego any rent, you can offer to let them stay as tenants for the rest of their duration.
That’s it! To recap, we emphasized that getting all your documents ready could save you time. Also, don’t be shy to go above the asking price in your offer, and include a well-written letter explaining why you want the house. Take care to place yourself in a favorable condition, and negotiate terms that might sway the owner in your direction.
Facing a competitive market doesn’t mean you have to fret. As long as you go in prepared, you can start winning bidding wars of prime property. If you’d like an extra hand, work with a company that understands the local market.
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