How to Win the Bidding War on the Home You Want

If you are buying a home at the height of a citywide seller’s market or simply want a sought-after house in a neighborhood with limited turnover, you may find yourself in the midst of a real estate bidding war.

Competing against faceless prospective buyers may bring out the warrior in you, but before you decide to go all out in your battle, you need to step back and decide how much you really want that particular home.

Should You Compete in a Bidding War?

In the thick of competition you may forget your end goal is a home you love and can afford to own. If your offers have been turned down by several sellers because of competing buyers, then you may feel pushed to make an aggressive offer for the next home you like.

You should stop yourself from competing just because you think the time is right to become a homeowner or to move up into a new place. Instead, think about whether you really want the particular house enough to fight for it.

To guard against making an emotion-fueled offer for a house, take a hard look at your finances. While it may feel good at first to beat out other buyers and to purchase a property, it won’t feel so great in a year or two when you are struggling to make the payments on a house beyond your means. Know your limits before you begin to bid.

Prep for Battle

Your first step before entering a bidding war should be to consult with a lender to understand the maximum amount you can borrow, to evaluate how much cash you have to spend while keeping enough money in a reserve fund.

Next, make sure you hire an experienced REALTOR® who can share information about local market conditions and communicate with the seller’s agent. You should rely on your REALTOR® for advice about how to handle a bidding war, but be sure to do your own research: visit a lot of homes in the area where you want to buy so you understand the value of various properties before you make an offer.

Bidding War Strategies

Your REALTOR® should work with you to craft an attractive offer based on the list price for the home, a comparative market analysis of similar homes, and knowledge gained from the sellers’ agent about the sellers’ motivations and preferences.

In a bidding war, it’s important to work with a REALTOR® who will move quickly to present your offer and any counteroffer, one who is easy to communicate with during the transaction.

While you may assume money is the motivator that steers sellers to one buyer over another, there are other ways to make your offer attractive, such as these ideas:

• Solid financing: You may be competing against cash buyers, so make sure your loan pre-approval is in place and you have completed all required documentation other than identifying a specific property.
• Eliminate contingencies—carefully: If you own a home now, you may want to offer to buy another home without making your contract contingent on the sale of your current home. You take the risk of carrying two mortgages for a while, so make sure you can safely handle the payments. You can also decide to have an “information only” home inspection rather than making your offer contingent on the outcome of the inspection.
• Make the settlement date convenient for the sellers: Rather than negotiating on a closing date convenient to all sides, you can tell the sellers you will work with their schedule or rent back the property to them after the closing.
• Offer to pay all closing costs: You can reduce the sellers’ out-of-pocket expenses by offering to pay their share of the settlement fees, but before you do this get an accurate estimate of what those costs will be and make sure you have the funds available to pay them.
• Personalize the transaction: Sometimes the tipping point for sellers who receive multiple offers is something emotional rather than financial. A personal letter describing your love of their home may tilt the scale in your favor.
• Try an escalation clause: Money talks, too, so you can add an escalation clause to your offer that increases your bid by a certain amount above other offers. Just make sure you set a limit on how high your offer will go.
• Control yourself: Remember that any offer is subject to an appraisal (unless you waive that contingency, but that’s not recommended unless you have plenty of cash), so be careful not to bid above the market value of any property.

Trouble Pulling the Trigger? Here’s How to Commit to Homeownership

You’ve saved for a down payment. You’ve pored over the local listings for months. Touring open houses has become part of your weekend ritual. But months, perhaps years, have passed and you are still in your rental.

For many first-time homebuyers, pulling the trigger on a purchase can be a frightening experience. Will you be happy there? Will you like your neighbors? Will you be tied down—house rich and cash poor? What if you lose your job? Will you hate your commute? In short, your fears stem from the unknown.

Meanwhile, your current home is familiar. You’ve come to accept its shortcomings—the loud neighbors, the leaky ceiling, the scant street parking. It has few surprises.

Take Paolo Forte, the eternal condo-shopper, who looked for years in Boston.

“I have actually seen condos come on the market, sell, and then be resold a second time,” Forte said. “While I’ve been waiting, condo prices continue to rise, and I keep spending more money on rent.”

In Betsy Townsend’s years as a REALTOR® in Boston’s pricey Beacon Hill, she’s seen everything.

“I find that people often hesitate to make the ‘biggest purchase of their life’ because they fear they will make a ‘bad investment’ and pay too much,” Townsend said. “Sometimes people lose sight of the fact that they are looking for a place to live instead of just an investment.”

Still, there’s hope. Your family, friends and co-workers took the leap and are reaping the benefits. Give these steps a try and you could be one of them:

Firm Up Your Finances

Anticipate the new costs that you will incur, such as taxes, homeowners insurance, utility bills and commuting. This will help determine the maximum price you can spend on a house. If your daily budget will change with a new home, consider a trial run living on that budget for a few weeks, to make sure you can. Enlisting the help of a financial expert will give you an objective view of your finances. Remember, the first year is the most difficult. After that you will begin receiving tax benefits.

Partner With an Agent

Even though the Internet gives you access to endless amounts of market information, don’t be tempted to go it alone. Instead, interview several real estate agents and find one you like who listens to you. He or she can line up properties to view, answer many of your questions and make connections for you in your new community. Agents often have the inside track on new properties just coming on the market.

Accept Some Risk

Realize that there is uncertainty in everything, but no matter what happens, you will deal with it. Ask family and friends about their experiences and learn from them. Be sure to keep some cash reserves in the bank as a safety net. And remember, you have homeowner’s insurance for a reason.

Fine Tune Your ‘Must-Haves’

Is there a community that you absolutely must live in? Are you adamant about a garage, a fireplace or a finished basement? Make your list of what’s vital. You may find that you are willing to sacrifice one feature if the rest are fabulous. If you are not crazy about the house, don’t bid. It’s important that you love it at the outset.

Be Ready to Bid

Regardless of the market, great houses do not stay available for long. One open house can lead to three offers. If you love it, be ready to make your best offer. If you are wavering, ask yourself, “How will I feel if I don’t get this house?” You might just get it, and if not, at least you will know you tried.

Reap the Reward

Owning a home can be one of the most exciting and satisfying things you will do in your life. It’s an investment that can pay you personal dividends as well as financial benefits.

Keep Your Cool This Summer

Summer is time for fun in welcome warm weather—but it’s also important to stay cool when the temperatures really get up there. Both indoors and out, keeping cool will help you and your family feel more comfortable and avoid heat-related health problems as well.

Limit outdoor activity during the middle of the day as much as possible. Save mowing the lawn for later in the day or early in the morning. Get your walking or running in early before the sun’s heat makes things uncomfortable. You’ll feel better, and it’s better for your health, too. Keep an eye on children, who tend not to notice the heat as they focus on their activities. Make sure they take breaks in the shade, and have plenty of water available at all times. Fruit that contains a high percentage of water, such as strawberries, apples, cantaloupe, and watermelon are welcome treats on a hot day.

When the temperature rises, it’s also important to pay attention to the elderly, as they often have diminished abilities to cope with heat. Keep water available within easy reach and monitor the room temperature. If there isn’t air conditioning at home, an outing to a movie theater, mall, or library can be a comfortable and fun way to spend a few hours in a cooler environment.

Indoors, keep south- and west-facing windows covered during the day to minimize heat buildup as the day progresses. Open the windows in the evening when it cools down to let the fresh air in. Ceiling fans and portable fans do a good job of circulating air; even though the air itself isn’t being cooled, the air movement will make it feel several degrees cooler and make things much more comfortable. Hot air rises, so it’s likely that heat will build up quickly on second-story levels. Try cooling these areas before bedtime for better sleep. Electronics, especially large flat-screen televisions, generate quite a bit of heat when in use, so consider limiting viewing time. You’ll save energy, too.

When cooking, stick to grilling outdoors or using the microwave whenever possible. Be sure to set the dishwasher on its unheated drying cycle, and take advantage of the delayed-start feature if your unit has one. Setting it to start later in the evening can help keep things cooler. In the laundry, use full loads and dry clothes early in the day to avoid heating up the house. Think of the dryer as a heater that will run for an hour or so—not a pleasant thought on a hot day!

You can use these practical ideas right now in your home. Enjoy the summer—and stay cool.

Home remodeling projects that are worth the money

The warm season is traditionally the busiest home-buying season of the year, but the warm months are also the time when the market is flooded with inventory as would-be buyers put their existing homes up for sale. Modern remodeling projects can help increase a home's value and make it more attractive to potential buyers, but not all projects have the same return on investment.

Here are the top home remodeling projects according to USNews.com.

• Start small. Every potential buyer sees the front door before they enter the home, so it's no surprise that replacing the home's front door marks the biggest return on investment. A new door could add 96.6 percent of the amount spent on it in new home value.
• Delighted by a deck. Looking for a project that will hold its value and excite buyers? A wooden deck does the trick. A deck project costs $9,539 nationwide, but homeowners can recoup up to 87.4 percent of that cost when selling the home.
• Attic bedrooms. Most homes don't utilize their attic space, so those that do are attractive to buyers. Attic bedrooms have an average return 84.3 percent of what is spent on them.
• Replace the garage door. This inexpensive switch can have a big impact on the curb appeal of a home. The average garage door replacement costs $1,534 with a return of up to 83.7 percent upon sale.
• Update the kitchen. An updated kitchen is usually a home's top selling point, and minor kitchen remodels could have a return on investment of 82.7 percent.

Source: 8 Remodeling projects that are worth it.

What you need to sign your mortgage

Purchasing a new home is one of the most exciting moments in a person's life. If you are about to sign your own home mortgage, congratulations! This is a momentous occasion.

While you've given plenty of thought to the square footage, location and appearance of your new home, perhaps you haven't paid as much attention to what you'll need to actually sign the mortgage. If that is the case, don't worry. Just follow this list and you'll likely have most of what you may need for signing day subject to each lender's individual underwriting criteria.

Make sure to present the following documents on or before the day of your mortgage signing:

• Your tax returns or pay stubs for the last two years
• Your monthly bank statement for the last two months
• A signed loan application
• Proof of insurance
• Signed disclosures
• A preliminary title report
• An electronic appraisal

You may also need to bring the following documents depending on your own individual circumstances.

• Your rental history, if you are renting. Usually this includes 12 months of canceled rent checks.
• A CPA letter or business license if you have been self-employed for the last two years or more.
• Any applicable gift letters regarding the down payment.
• Any letters of explanation that have been requested to clarify existing issues.

4 Ways to Make a Great First Impression When Selling Your Home

When selling your home, first impressions matter. Just because your home is listed and the "For Sale" sign is firmly planted in the front lawn does not mean it will attract buyers.

A home needs to be visually appealing to encourage a sale. Even in a market where homes are selling quickly and at full asking prices, it is still crucial to spruce up your home and prove that it is worth every penny you are asking for it.

Here are four tips to help your home make a good first impression that beckons potential buyers:

1. Make an Enticing Exterior

The walk-up to your house should be inviting, not forbidding. Stay on top of your lawn mowing and driveway maintenance, and tidy up your front landscaping. This includes:

• Moving all toys, bicycles and scooters away from the front of the house
• Cleaning windows until they are sparkling
• Making sure address numbers are in place and polished
• Giving your front door, garage door and gutters a fresh coat of paint
• Adding a few embellishments like a colorful welcome mat, a wreath for the door or a big potted plant to the side of your front door
• Checking the roof to see if it needs repair, even if it'rsquo;s cosmetic.

2. Shape Up the Interior

Once the exterior wows potential buyers, you can continue to make a great impression as they make their way inside.

For starters, clear any clutter. If you have too much furniture, put some of it in storage. Keep kitchen and bathroom countertops as clear as possible. Closets and shelves should be well-organized and give the impression that they are spacious.

Remove excess knickknacks or family photos that make the house feel like your home, instead of allowing potential buyers to picture themselves as the residents.

Clean the inside of your home from top to bottom. Dust and open all your blinds and curtains to let light in. Wash away smudges from walls and touch up the paint as necessary. Wipe down the inside and outside of your appliances and microwave. Remove ash from your fireplace. Get your carpets cleaned and vacuum your floor each morning before potential buyers view your house.

Addressing aesthetics can leave a lasting, favorable impression. So, hang fresh, clean towels in the bathrooms. Position a beautiful centerpiece in the center of your dining room table and a few potted plants in decorative containers throughout your home. Consider placing potpourri in key spots, especially if you need to eliminate pet odors or if you have a smoker in the house.

3. Check on Evening Appearance

Even if you're positive your home is presentable during the day, double-back to the exterior and interior areas at dusk to gauge your home's ambiance in the evening.

Ensure that the walkway is well-lit and house numbers are visible, and that outdoor lighting enhances the home's appearance.

Inside, make sure to replace nonfunctioning light bulbs in fixtures and vanities, and leave key decorative or track lighting turned on so that the home doesn't seem dark upon entering.

4. Make Necessary Repairs

Repair anything that is broken. Cabinet doors should close properly. All your faucets should be drip-free.

Remember, you are trying to present a simple, clean, attractive, problem-free home that exudes potential - an empty, yet enticing palette for your home's next owners.

Taking time to create a great first impression sometimes is all it takes to quickly send a offer your way.

Written by Patricia-Anne Tom - REALTOR.com