If you are looking to buy your first home in a highly desirable neighborhood, then you should prepare for a bidding war. Bidding wars are common in some areas of the country, and the highest bid is not always going to be the winner. If you want to win a bidding war, but you do not have a ton of extra cash to work with, then follow the tips below to make sure your bid stands out.
Offer A Large Earnest Payment
If you are new to the home buying market, then you may have never heard of an earnest payment before. An earnest payment is a lot like a down payment, and it is the money set aside during large transactions. Earnest payments are not always offered, and some bidders may not offer this payment at all. This is especially true for individuals who are looking at 0% down types of mortgages.
If you have done your due diligence and have saved the traditional 20% for a down payment, then use this for your earnest payment. You do not need the whole thing, though. A traditional earnest payment is typically only a small percentage of the home purchase price. Some home sellers will ask for a specific earnest payment, but you can offer more than they ask. The payment is given to the title company and is held until the home deed is transferred to you. You do not lose the money; it sits as a good faith payment that goes towards the overall sale price.
Securing an earnest payment and informing the home sellers of this is a good way to show you are serious about buying the home. It also indicates that you have not involved yourself in bidding wars for other homes in the area.
Cover Selling Expenses
Many homeowners will cover certain types of expenses when they sell a home. While this is traditional, you can offer to pay some of the costs. This is one way that you can reduce stress on the seller and make your bid stand out. Some expenses you can agree to pay include home transfer taxes, staging and cleaning costs, and even moving expenses.
Covering the costs of expenses and repairs instead of adding contingencies to the home inspection can reduce seller costs as well. However, keep in mind that it may be difficult to get out of the home sale if you find a major problem with the home during the inspection. In other words, you assume the risk of added expenses by buying the home "as is". If the home is newer or if a preliminary inspection has been completed before the house was put on the market, then this may not be a huge issue and it can rush the home sale along.
Contact a real estate agent such as Hannes Becker - RE/MAX Humboldt Realty to learn more.