Take Care With Bidding-War Tactics in Pursuit of a Home

When it comes to bidding wars, buyers need to consider both the price and the terms of the offer. While some buyers are waiving contingencies for home inspections, financing, and appraisals that protect their earnest-money deposit in order to win bidding wars, some real estate professional discourage such tactics. Others are using escalation clauses to increase their offers above the list price, and some even offer sellers two months of free rent after closing. In Seattle, the lack of licensed inspectors means many buyers are moving forward with less expensive pre-inspections, which involve a quick walk-through with an inspector. There is no written report with a pre-inspection, but buyers can pay the balance of the inspector’s regular fee to obtain the written report if they get the home under contract. “Sometimes we’ll have to call seven, eight, nine, 10 inspectors before we find one,” says Locality managing broker Trevor Smith. Buyers who decide to forgo the appraisal should be ready to bring more cash to the closing table or forfeit their earnest-money deposit. However, attorney Marc Holmes of WaLaw Realty says waiving the appraisal contingency may make sense if the buyer makes a huge down payment, which can cover the difference between the appraisal and the sales price. Buyers also should not expect to win bidding wars with personal letters and photos, as sellers generally take emotion out of the equation. | Read More