Home buyers in markets with a low supply of properties up for grabs need to be ready for bidding wars, but they should take care to avoid paying too much. Realtors say buyers need written confirmation of a mortgage preapproval or sellers will toss aside their offer in favor of those that already have financing. Gea Elika, principal broker at Manhattan-based Elika Associates, says buyers should give themselves room to bid up by searching in a price range just under their maximum. He recommends that they not overpay by much, especially if they plan to move in a few years. Some buyers are including escalation clauses in their offers, which ensures they get a chance to counter in the event of a competing offer by increasing their bid by a set increment, with a cap on how much they are willing to pay. “What people don’t realize is that when you overbid above the value of the house, you have to come up with that extra money out of your pocket,” says Association of Mortgage Professionals President Don Frommeyer. Experts say buyers can increase their chances of winning a bidding war by accommodating the seller’s needs; including a personal letter; or avoiding a contingency based on the sale of their current home, provided they can afford to cover two mortgages if their home takes a while to sell. | Read More