How to Lose the Bidding War But Still Get the House
By Michael Corbett
If your offer is rejected, a little patience (and a backup offer) may pay off.
When there are more buyers than available homes in your area, real estate competition can get fierce. Chances are, not every offer you make will win the deal. But don’t despair. It’s possible to turn that next rejection into your dream home.
Here are seven reasons why your initial unaccepted offer may eventually close the deal.
1. A backup offer is a secret weapon.
You made your best offer, but it wasn’t strong enough to secure the home — maybe your competition offered more money, or their terms were slightly better. All is not lost. Ask the seller to accept your offer as a backup offer. There is no cost to you, yet you are in line to get the property if the deal goes sour.
2. It’s all so close, they can taste it.
Once a seller has an offer and it’s progressing, they are already psychologically moving from their home. They’re picturing closing day and the moving trucks in the driveway. If the deal abruptly comes to a screeching halt, the seller is much more willing to move forward with a backup offer just to keep that momentum going.
3. Your chances improve after the inspection.
I have been successful in backup situations where an inspection has uncovered more issues than the first buyer wants to deal with and the buyer walks away from the house. The good news for you is that those issues won’t go away. The seller may realize he or she can no longer play hardball and be more willing to accept your offer, rather than lose the deal a second time.
4. We’re in an era of tougher loan qualifications.
As loan qualifications become tighter and more scrutinized, some homebuyers may not qualify and will have to back out of the deal. In this situation, you have the advantage of jumping in to save the day.
5. Set a 30-day time limit.
The longer the current transaction takes, the greater the chance the two parties are struggling to come to an agreement. Set an expiration date of 30 days for your backup offer. If the two parties are unable to close the deal, it may force the seller to settle for the next best thing before it’s too late.
6. Get first right of refusal.
Ask for a first-right-of-refusal clause in your backup offer. In this case, you’re not bound to purchase the property, but you’re first in line if the other deal falls through.
7. Get the terms of the backup in writing.
Once the seller agrees to accept your offer as backup, get a fully executed detailed agreement, in writing. Be sure they are obligated to sell to you within a certain period at the agreed-upon terms if the property becomes available.
Here’s one more bonus for the backup buyer.
Legally, the sellers have to disclose any problems the first-position buyers uncovered, even ones that made them bolt. As a result, you’ll know the property’s flaws in advance, saving you time and money on your own inspections.