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Email Post to a Friend: 5 Strategies for Bidding on a House this Spring

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March
11

Spring Home Bidding-Remerica Hometown REALTORS

Home buyers in the Ann Arbor area should get ready for a competitive environment when it comes to buying a home this year. Ann Arbor homes for sale are in demand, and as a consequence, it might help you to prepare for a bidding war. While it's impossible to predict what might happen, having enough options in place could give you an edge in a tight market.

  1. Loan Pre-Approval
    This is the first step to take regardless of whether you expect a bidding war. Buyers see pre-approval as a sign that the buyer is serious, as do agents. Our REALTORS® can suggest mortgage brokers who can help you through this process.

    Remember that pre-approval does not mean you've been granted a mortgage. It means that a lender has looked at your financial situation and has given you an estimate of the maximum loan amount for which you could qualify.

  2. Down Payment Adjustment
    If you find yourself bidding against someone else, the easiest approach is simply to make a higher offer. But if the bidding war goes beyond the expected appraised value, consider upping the amount of your down payment. The bank will only loan you as much as the appraised value minus your down payment.

    By increasing the down payment, you effectively lower the amount you have to borrow. Back up your ability to make a larger down payment with financial proof like W-2s, tax records, and retirement account balances.

  3. Skip the Contingencies
    One way to differentiate your bid from others is to disregard the conditions of the sale that turn up in the inspection report. This agreement is a gamble about the condition of the home. If there aren't any major defects, you'll come out ahead. On the other hand, there could be serious problems with the critical systems in the home, including wiring, plumbing, or structural.

    You can still back out of the deal, but it will cost you your earnest money, which might be cheap compared to fixing extensive problems.

  4. Turn to Cash
    A small percentage of home buyers pay cash for a number of reasons. But in a bidding war, cash can be king because the transaction can close quickly. Generating a mortgage takes time because significant paperwork and people are necessarily involved.

  5. Use Time as Money
    If the seller isn't necessarily motivated by money, consider these ways to make your bid stand out among the others:
    • Fast track it. When cash isn't possible, you can still make your offer more attractive by promising to speed the approval and closing process. Start by scheduling the home inspection immediately and make doubly sure your lender has all the paperwork that they could possibly require. Make all requests for paperwork priorities.

    • Modify the move-out. If you really want the house, make it easier for the owners to move out. Be flexible with the move-out date and arrange for a professional cleaning service. If it's going to be a local move without too many complications, offer to pay for the movers.

We at Remerica Hometown Realtors can help you find your perfect home in the Ann Arbor area. Please feel free to contact us for more information about successful strategies when facing a tight market.