A recent column about would-be homebuyers giving up because they keep losing bidding wars brought a flurry of responses: Readers want to know how they can become winners in this arena.
The competition factor certainly isn't going anywhere. According to Redfin, more than half of all houses on the market drew competing offers in January. In one case last year, a rather lackluster house in Los Angeles drew offers from 39 wannabes.
Here, then, are some timeless tactics that should give you a fighting chance.
-- Ready and set. Line up the professionals you'll be using in advance -- lender, lawyer, home inspector, appraiser -- and make sure they can be ready to go at a moment's notice.
-- Preapproved. Get preapproved, not just prequalified, so you'll know exactly how large a mortgage you can get.
-- Start lower. Search in a price range somewhat below your upper limit -- if you find yourself in a bidding situation, you'll have some wiggle room.
-- Go higher. Offer more than the list price. At today's low interest rates, an extra $10,000 may add only $40 a month to your mortgage payment.
-- Escrow up. This is the amount you attach to your offer to show the seller you're serious. The money will be held in an escrow account and used as part of your down payment at closing. The more you can put up at the start, the better you'll look. If the deal falls through, as long as it wasn't your fault, you should get your money back.
-- All cash. An all-cash deal tells the seller you won't be stopped if your financing falls through.
-- Clean offer. The fewer the contingencies, the better. One to jettison for sure: the one about you selling your current house first. In this frenzied market, no seller is willing to wait around for that. If you really must sell first, consider selling to a company that buys houses as-is.
Also consider crossing out the contract stipulation that the house must appraise for no more than a certain amount. Think twice, though, about giving up your right to have the place inspected. Otherwise, you could be buying problems you never bargained for.
-- HOA. If a homeowners association is involved, you usually have about a week to review those documents. Use that time to obtain an appraisal and an inspection. And since you can use the HOA document review to get out of the deal for any reason, you can cancel if the appraisal or inspection turns up something you don't like -- even if you waived those contingencies.
-- Step up. Think about adding an "escalation clause," which says you agree to bump your offer by a certain amount above your competitors'. So if you offer, say, $300,000, and someone else bids $310,000, you promise to best that amount by $1,000. The more, the better, but make sure to set a limit.
-- Other items. Offer to pay some of the seller's closing costs -- title insurance, transfer and recordation taxes, for example, or even moving expenses -- up to a certain amount. Be creative: If you have a service you can offer, do so. If you are a mechanic, for example, offer to tune up the seller's cars for two years. If you are an accountant ... you get the idea.
-- Timelines. Allow the seller to remain in the house for up to 90 days after closing. This will not only give you time to sell your place, should you need to, but it also will give the sellers any extra time they may need. Out of the goodness of your heart, you may not even want to charge them rent, or at least not more than what your mortgage payment will be.
-- Love letter. Write a heartfelt missive about how wonderful you find the seller's house, how well taken care of it seems and how you will cherish it once it's yours. Corny, yes, but with some sentimental sellers, it works. You can also consider meeting with the sellers and pleading your case in person. Dress up your little ones, tell them to mind their manners and bring them along.
-- Hang tough. Deals fall through all the time. A recent survey said 1 in 4 don't make it to closing, for any number of reasons. So ask that your offer be held as a backup, just in case. There's nothing wrong with coming in second or even third if you get to move up the line if the bidder ahead of you falls by the wayside.
-- Ask why. If you continually strike out, ask the seller or the agent why. Then you can reevaluate your strategy and craft your offer a little differently next time.
-- Time out. If you don't feel comfortable with being this aggressive, allow yourself to step away and come back when the market calms down. There's nothing worse than making a huge financial mistake -- especially one that you'll have to live with a for a long time.