10 Ways to Beat Out the Competition in a Home-Bidding War

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win bidding warThis post originally appeared on Trulia.

How to become the most desirable home buyer you can be—and create an offer that wins the multiple offer war:

1. Cash is king. Investors have been snapping up homes to flip or rent, and they usually come to the table with cash. Sellers love all-cash offers because they’re less likely to fall through before the sale closes. However for the average homebuyer—all cash is not possible.

2. Start 4 months ahead. If you can’t pay cash, you’ll need to get a mortgage. Three or four months before you shop for a home, check your credit reports, That will give you time to dispute any errors and take short-term steps, such as paying off debts. That will improve your credit score and get you mortgage ready.

3. Get pre-approved. Then get a bank’s preapproval. It will show sellers that a lender has verified your income and credit score and determined that you can afford payments on a mortgage for a certain amount.

4. 20% down payment. Any less than that is going to put you out of the running against all cash offers for sure. At least with 20% and a pre approval letter you will still have a shot. and your options for mortgages get pretty slim if you can’t come up with 20% down – many banks won’t loan on less than 20% down.

5. Have all your paperwork in order. When submitting your offer, be prepared to show your proof of funds and where you cash is coming from – along with that all important pre – approval letter.

  • Kate

    I bought my house 2 years ago in an INCREDIBLE sellers market in my area–homes were selling in one day, almost before they were listed. I believe I “beat” the competition for most of the reasons above–no contingencies, I had a large down payment, and I offered to close early–I knew they had a house already, as my agents were also their agents. I also had my mortgage through the same bank as the sellers which resulted in lower closing costs for all of us, so I believe that helped me too (smaller city, so fewer banks). My best offer was also a random number, that also happened to end with my birth date. I wasn’t even the highest bidder, but I “won” the house anyways!