How to Win a Bidding War in Virginia

A bitter cherry on top of a relentless homebuying journey, bidding wars can often leave many buyers priced out of their dream home. Competition, especially in a seller’s market, can quickly drive home prices above asking as buyers attempt to secure the deal.

Luckily, there’s a way to prepare for bidding wars and potentially come out on top. The keys include efficient and foresightful budgeting and leveraging essential real estate tools such as commission rebates.

Below, the team from Prevu Real Estate outlines essential tips every buyer should remember as they prepare to shop for homes in a competitive Virginia real estate market.

Tips for winning a bidding war in Virginia

• Prepare an effective budget
• Secure a mortgage pre-approval
• Make an all-cash offer if possible
• Consider waiving contingencies
• Leverage commission rebates
• Personalize the offer with a letter

Prepare an effective budget

There is no perfect formula for winning a bidding war in Virginia. But if you’re wondering what to start with, we suggest tackling the budget first.

The trick is to think of it in layers: you want your budget to cover the essentials like a down payment and closing costs, but you also want to set aside extra for offering above the asking price.

Homebuyers often get deterred by bidding wars because they don’t have backup funds when competition starts raising the price of their desired home. When saving up for these scenarios, it’s not an exact science, but you’ll be glad you did when you realize you have to sweeten the pot.

A good strategy is deciding on a firm price range. If your limit is $1,200,000, you can analyze how much you’re willing to give above that and start setting aside accordingly, or restrict your search to homes between $1,000,000 and $1,200,000 to leave room to be aggressive against competition. Naturally, it’s best to do this as early as possible in your home-buying journey, but the painstaking approach can help give you the confidence to handle a bidding war.

Secure a mortgage pre-approval

Acquiring a mortgage pre-approval is more than just a cursory glance at your finances. It involves a deep dive into your financial history, assessing your creditworthiness, scrutinizing your debts, and evaluating your income. 

When a lender finally hands over that pre-approval, it’s an affirmation that not only are you creditworthy, but they are willing to back you up to a specific amount.

For sellers, a pre-approved buyer is a reassuring sign. It’s evidence that the buyer has already cleared the preliminary financial hurdles and is unlikely to face mortgage-related snags that could derail the sale. 

This assurance becomes even more crucial in hot markets like Virginia, where sellers are eager to close deals without unforeseen complications. In a multiple-offer scenario, coming to the table pre-approved by a reputable lender might be the difference between securing your dream home and going back to the drawing board.

Make an all-cash offer if possible

In real estate, cash is king. If you're in the enviable position to make an all-cash offer in the Virginia market, you might automatically elevate your standing in the eyes of sellers.

An all-cash offer greatly simplifies a transaction. It eradicates the long waiting periods associated with bank loan approvals, underwriting processes, and potential delays that could give sellers sleepless nights. Moreover, it ensures the transaction is less likely to fall apart, making it an attractive proposition for sellers keen on a straightforward sale.

However, it's imperative to be prudent. Placing such a hefty amount on the line has its risks, so consultation with financial advisors is paramount. They can provide insight into whether such a move aligns with your broader financial strategy.

Consider waiving contingencies

In most scenarios, contingencies serve as protective buffers, preserving the buyer's interests. But, these same contingencies can become barriers in a bidding war, potentially making an offer less attractive compared to the competition.

For many sellers, the allure of a smooth, rapid transaction is often too enticing to ignore. As such, if a buyer makes the decision to waive certain contingencies, like inspection or financing contingencies, it can supercharge their offer's appeal. 

Yet, this maneuver isn't devoid of risks. Removing the protective layer of contingencies can expose you to unforeseen challenges or financial burdens. An experienced buyer’s agent has expertise that is especially vital when making an informed decision about waiving contingencies.

Use your agent’s knowledge and experience with homes to help you decide whether it’s worth the risk to buy a home "as-is," for example, without worrying about a home inspection first. 

Of course, doing due diligence is every buyer’s "last line of defense" against potential hurdles in the future. But in a scenario where you’re certain you’ve found your dream home, it can make sense to consider this option.

Leverage commission rebates

Bidding wars are often all about the money; the more you have at your disposal, the better your chances of outbidding the competition. No other real estate tool except a commission rebate can guarantee extra funds after closing the deal.

The key is to work with a brokerage that offers commission rebates. In a nutshell, rebates, or homebuyer refunds, are a portion of the buyer’s agent’s commission returned to you as savings once you close. 

Tech-enabled brokerages like Prevu Real Estate unlock commission rebates for buyers by investing in salaried agents and streamlined online tools to help simplify the homebuying process. Prevu currently offers the largest commission rebate in Virginia, allowing buyers to potentially receive up to 1% of a home’s purchase price via the Smart Buyer Rebate.

For instance, if you purchased a home with Prevu for $1,500,000 in Arlington, Virginia, you could potentially receive a rebate totaling up to $15,000 after closing. 

So, how does receiving the money after closing help you in a bidding war? 

Prevu’s digital homebuying platform shows estimates of the rebate you can expect to receive under every listing. Knowing you may get a check in the mail for a certain amount can help give you confidence to make a stronger offer during negotiations.

Personalize the offer with a letter

Selling a home isn't just a financial decision for many homeowners. It's also an emotional one. 

By writing a sincere letter, you can connect with the seller on this emotional level when buying a house in Virginia. Simply expressing genuine appreciation for the home's architecture and design, or complimenting how well the owner maintained the home, can create a memorable impression.

The idea here is to stand out amidst a flurry of numbers and contractual terms. A personal letter can achieve this by presenting you not just as another bidder but as a genuine human being eager to create their own memories in that space.

While the financial components of your offer remain paramount, never underestimate the power of honest human connection in these transactions. It's an added touch that requires minimal effort but can sometimes yield significant dividends in the negotiation process.

Interested in buying a home in Virginia? Browse listings and see how much you can save with Prevu's Smart Buyer Rebate.