Tips for Winning a Bidding War When Buying a Home? (Seattle: for sale, foreclosure)

[homesinseattle]

evda, I'm helping a client with an offer today and their earnest money is $50K. Interesting, I have noticed lately that some lenders have jumbo pricing that is the same or even better than non jumbo.

[evda]

Originally Posted by homesinseattle

evda, I'm helping a client with an offer today and their earnest money is $50K. Interesting, I have noticed lately that some lenders have jumbo pricing that is the same or even better than non jumbo.

Why not make it $75k!

We avoided a jumbo because it was harder for lenders to promise us a closing time under 30 days due to the extra diligence needed. Having a potentially longer closing time would be viewed as a negative for a seller.

[homesinseattle]

I know some great lenders who can close jumbo loans in 3 weeks, I see it as essential in this market. Having all documentation to the lender in advance makes a real difference.

[evda]

We bought two years ago..thanks though!

[cis_love]

wow, i thought 2% was enough for the earnest money. $50K seems crazy to me!

[homesinseattle]

cis_love: If there is no competition for the house you want, 2% normally does the trick. Unfortunately now, there often is. Let's surmise a purchase price of $800,000. If you were a seller looking at 10 offers (essentially equal in every other way), one had a $16,000 earnest money and one had $50,000, what would you do? Interestingly, Washington State real estate contract law only allows buyer to lose 5% of purchase price if they default for no legitimate reason. Lower price points often attract lower earnest monies, but not always. As a seller, you want your buyer to be vested in the process, large earnest monies go a long way to accomplishing that.

[Boxkicker]

I guess my $1,000 in 2011 was pretty good for earnest money for a $350K house!

[RVD90277]

when we sold our house in CA, it was also a competitive market. cash offers were great but many were lowball offers so i didn't consider them. financing offers were fine too as long as the buyer had good credit but many times the appraiser wouldn't appraise correctly so the bank wouldn't give financing. i ended up selling eventually to a cash offer that was at asking price.

personally, i had nothing against a good solid offer that had a finance contingency as long as the offer was good and the buyer had good credit. the appraiser thing was a pain though because i wasn't going to take less and the buyer didn't want to cover the difference.

i didn't really care about the earnest money as i always figured that the buyer would get it back if they back out anyway based on one of the contingencies.

of course if a buyer walks in all cash, all contingencies waived, close in 5 days, i would have hit the jackpot but no such unicorn appeared in our case. the closest ended up being the offer we took which was cash, 10 day close, inspection contingency only.

as for bidding strategy, the only thing i can offer is to know the price, anticipate the bids, and add another $5k-$10k to what you think the highest bid will be.

[Clydebailey]

We recently bought (June 2014) in Kirkland. There were multiple offers - pre-inspections - large earnest money - unsure if there were cash offers. We had an escalation clause - with increments of 1k - that worked for us.
I know the market is changing and even hotter than it was last summer - but point being - you can win the bidding war - don't vacillate on the home - if the neighborhood is right - the bones of the home is good - and you can make color changes - make it your own - then do it.
We have bought / sold a number of homes over the years and no one home was completely 'perfect' but it was during the time we lived there a great home.

[homesinseattle]

Well said, Clydebailey.