Here's how I won the bidding war for a hot market house - without making the highest bid

Here’s how I won the bidding war for a hot market house – without making the highest bid


  • We won the bidding war, even though the next best bid had a little more money and a higher down payment.
  • We made our serious deposit non-refundable so the seller could keep our money no matter what.
  • Renouncing serious money is a safe bet for the seller because he will still get some money even if we cancel the contract.

During the two months we were buying houses, my husband and I tried to buy six houses. More than once we lost with an offer that was only slightly better than ours. Knowing we were so close, but in the end we weren’t picked, added salt to the wound.

At trial number six, there was another offer that was probably a little better than ours – but the seller still chose our offer. Here’s how we won the bidding war.

We didn’t have the highest bid

Our offer included an escalation clause. This means that we have offered an initial amount, but we have said that if there is a competitive bid, we will gradually increase our bid up to a certain amount. They called us that our bid was chosen as the maximum bid.

With an escalation clause, the seller must send you a competitive bid to prove that he has escalated your bid in accordance with the terms of your contract and not just increase the price because he could. When we looked at the competitive offer, we saw that the maximum amount of the buyer in second place was actually $ 1,250 higher than ours. They also had a 20% deposit, while we only had 3%. But even so, the sellers chose us.

We made our serious deposit non-refundable

Previously, the seller told our real estate agency that the sellers are looking for a combination of high money offers, but also the safest offers. To check the “safe” box, we have made our real money non-refundable.

The money earned is a part of you


deposit

that you pay in advance as soon as the seller accepts your offer, something like a security deposit. My husband and I made a serious deposit of $ 10,000 and ticked off our bid to forfeit the money. This meant that no matter what happened – even if we withdrew from the sale for a legitimate, legal reason – the seller would keep $ 10,000. The seller could immediately gain access to the money and use it without having to worry about having to return it to us.

If you are uncomfortable, you do not have to lose your serious deposit

Forfeiture of your real money makes your bid competitive, but it’s a risk. For us, we have decided that it is worth taking the risk because we have already given up many unforeseen events to make our offer competitive, including unforeseen inspections and titles. So we knew it was unlikely that we would get our serious money back anyway.

That $ 10,000 wasn’t the full amount of our down payment, so even if losing that money was hard, we wouldn’t start over if we lost it.

If you are interested in giving up your deposit, you do not have to lose the whole thing right from the start, as we did. You can do it in different ways.

For example, we made an offer for another house that had a septic tank. We said we would forfeit half of our serious money if they accepted our offer and the other half after the septic tank. (We didn’t get the house, but it wasn’t because of our serious money strategy. Someone just offered a lot more money.)

But just because losing serious money makes your offer more appealing doesn’t necessarily mean you should. If losing that money means the end of your journey after buying a home or puts you in a dangerous financial situation, you may decide that you are not comfortable taking risks – and that’s fine. I had to learn what compromises I wanted to make in the process of buying a house and which I would not move.



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