Download the complete issue - Pantagraph HOME MARKET, Friday, February 8, 2013 5


The bidding war is back. While not

every local real estate market is experiencing

bidding wars, some homebuyers

find themselves competing for

houses because there aren’t many for

sale in their markets. For example, in

Phoenix, it would take just 2.3 months

to sell all the homes currently on the

market, says Susan Paul, owner of

Better Homes and Gardens Real Estate

Move Time Realty in Scottsdale, Ariz.

The result? Many homes have 10 to 15

offers the day they go on the market,

she says.

To compete in a bidding war, buyers

need to prepare financially for the

home purchase. They have to familiarize

themselves with property values

in their target neighborhoods. And

they must know what they want.

“Too many buyers talk to a lender

and start looking at homes at the same

time,” says Eldad Moraru, a Realtor

with Long & Foster Real Estate Inc.

in Bethesda, Md. “You need to have

everything (financial) done before

you begin to look.” Then you are more

likely to win a bidding war.

He suggests selecting a lender and

loan product, completing everything

the lender requires and having a preapproval

letter in hand -- all before

submitting an offer.

Donna Fuscaldo

“You need to make sure your lender

is ready to issue an approval letter

specific to the property at the drop of

a dime,” Moraru says.

Paul recommends keeping a file

folder constantly updated with your

most recent pay stubs, all pages (even

blank pages) of recent bank statements

and any other documentation

the lender may need to make a quick

loan approval. Then you are ready to

make an offer.

A strong preapproval is essential,

especially if you are competing against

buyers with cash to offer, says Alan

T. Aoyama, vice president of Century

21 M&M Associates in Cupertino,

Calif. Any hint that you might have

trouble qualifying for financing could

eliminate you from the seller’s choice

of buyers.

“An all-cash buyer can even waive

the appraisal,” Aoyama says. “If you’re

a noncash buyer, you need to have a

copy of your proof of funds with your

offer along with a strong preapproval.

At a minimum, you should offer a

down payment of 20 percent if you

know you’ll be competing against

other buyers. You need to show you

have the funds to close and the ability

to make up the difference if the appraisal

comes in too low.”

Moraru says that in Washington,

D.C., and Maryland, it’s common to

accompany your offer with a financial

information sheet detailing your job

history, salary and bonuses, 401(k)

balance, how much you have for a

down payment, and where the down

payment money is.

A higher-than-customary earnest

money deposit can sometimes impress

sellers when there is a bidding

war, Moraru says. Just make sure you

fully meet all deadlines and terms of

the contract so you don’t lose your


To compete against other buyers in

a potential bidding war, make sure you

see a potential home the day it goes on

the market, so you can move quickly,

Paul says.

“Your buyer’s agent should talk

to the listing agent to find out what is

motivating the sellers and what they

need -- such as a quick settlement or

a post-settlement rent-back,” Paul

says. “Be flexible, and work that into

your offer. Make it as easy on the sellers

as possible so your offer is chosen

above 15 others.”

Paul says buyers should offer to

help the sellers in any way they can,

such as helping them find a home

for their pet if they can’t take it with


Moraru says while price is important,

sellers want to know the buyer

can finance the property and meet

any other conditions. If you don’t

know the date when the sellers want

to settle, you can write “will settle on

seller’s schedule” into the offer.

Aoyama suggests offering 30 days

of free rent if the sellers want to stay

in their home after settlement.

Most Realtors don’t recommend

buying a home without an inspection,

but making your offer contingent on

an inspection can weaken your position

if other buyers are waiving an

inspection contingency. Aoyama says

buyers should carefully read all disclosures

and reports that are available

because some sellers provide a home

inspector’s report for buyers. You

can also have an investigative home

inspection after your offer has been

accepted that can provide information

on the home’s condition.

“If you’re serious about a particular

house, you can have a home

inspection before you make an offer,

and then make a noncontingent offer

if you’re satisfied with the report,”

Moraru says. “You’ll need to move

fast, though, and have a home inspector

ready almost the day the home

goes on the market.”

One of the best ways to make your

offer stronger is to eliminate contingencies

regarding home inspection,

financing or appraisal, says Aoyama.

That puts you in a more solid position

to win a bidding war. If you have cash

reserves to cover the gap between a

low appraisal and your offer, you can

waive the appraisal contingency, he

says, but leave your financing contingency

in place to protect yourself.

“If you can’t waive these, you can

at least shorten the time frame, such

as (by) reducing the loan contingency

to 10 days if you know your lender can

provide you with proof of financing

quickly enough,” Aoyama says.

Offering to buy the home as is can

be tempting, but make sure you have

an accurate idea of the home’s condition

with an informational inspection

for safety.

Paul says buyers need to make

their offer as strong as possible, so if

you don’t need a home warranty or

help with closing costs, don’t ask for


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