by Maurie Backman | Aug. 1, 2021
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Here's how you can pick up the pieces when you lose a home you wanted to purchase to another buyer.
It's a tough time to be looking to buy a home. Housing inventory has dropped to record lows, which means there aren't many properties to choose from. Meanwhile, mortgage rates are very attractive right now, so a lot of buyers want to take advantage of them.
But the combination of limited inventory and buyer interest sets the stage for lots of competition when it comes to making offers. In fact, if you find a home you want to buy, there's a good chance it'll wind up the subject of a bidding war, where you and at least one other buyer try to outdo each other in the hopes of getting your offer accepted.
Bidding wars can be extremely stressful for buyers (though to be clear, they're great for sellers, since they typically drive home prices up). And if you're coming away from a recent one as the losing party, it's a blow that can be tough to get over -- especially if the home another buyer snagged from under you seemed like your dream home. But if you lost your last bidding war, here are a couple of ways to cope.
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Maybe you lost your recent bidding war because another buyer came in at a much higher price that you couldn't match. Or maybe you lost to a buyer who was able to pay for that home in cash, whereas you need a mortgage to purchase a place of your own.
Generally, your real estate agent can find out why your offer didn't win out, and it's worth getting that information. That way, you can see if there's something you can do differently should you land in another bidding war.
Say you were going after a home listed for $500,000 but you refused to go above $525,000, and another buyer snagged that home for $540,000. The lesson there might be that if you're looking for a home in the ballpark of $500,000, you may need to prepare to pay up to 10% higher to get your offer accepted the next time around.
Of course, if another seller won out by paying in cash and that's not an option for you, well, there's not much to be done about that. But then at least you know that the price you offered to pay wasn't the issue.
Because housing inventory is so low these days, bidding wars are very common. If you can't handle another one just yet, hit pause on your home search. Inventory could open up over the summer, especially if things continue to improve with regard to the pandemic. And if you're in a situation where you've saving money month after month, waiting a bit could give you the wiggle room to bid higher the next time a listing catches your eye.
Losing a bidding war can be tough on many levels -- especially if you thought you made a good offer, or series of offers. But try your best to treat it as a learning experience -- one that could eventually lead to you getting an offer accepted and a place of your own.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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