The housing market has been intense in the last several months, which has led to many people ending up in bidding wars. As a buyer looking for a property, you don’t want to get swept up into a bidding war and end up with a home that isn’t actually worth what you’ll have to pay.
There are all kinds of problems with a hot seller’s market, but bidding wars are one that could end up getting people in over their heads. They may decide they want a home regardless of the cost because they’re pushed to find something, anything, in a market with little to purchase.
Looking at the national market, it is common to see satellite cities have more bidding wars because people want to find affordable options close to amenities. On top of that, a fear of interest rates rising may spur people to rush to purchase property.
What do you need to keep in mind if you face a bidding war?
If you get into the position where you’re caught up in a bidding war, you need to enter negotiations knowing what you’re willing to spend. You should know the property’s value in advance, so you are sure how much over that value you’d be able to pay in cash. Remember, you may not be able to finance the entire purchase if the home doesn’t appraise for the amount you want to spend.
If you want to beat out the competition, that shouldn’t be at the expense of seeing a seller’s disclosure or having an inspection. Going in sight unseen is one way you could end up facing serious financial losses in the future due to defects you just didn’t know about.
Real estate can be tough in this kind of market, but you do need to think about protecting yourself and the legal options you have if a home isn’t what you expected after a purchase.