6 Expert Tips to Win a Bidding War in Miami
By Aaron Randolph on February 09, 2024
Miami's competitive housing market can make it challenging to buy the home you want. The Magic City's seemingly endless summer, Latin-influenced art scene, and delicious seafood come together to create an enticing lifestyle.
With folks from all over the country relocating to Miami, it's not uncommon for multiple buyers to make offers for the same property. In a bidding war, it's helpful to step back and logically think through your options.
Educating yourself can give you an advantage when you enter negotiations. To bolster your chances of success in today’s market, the team at Prevu Real Estate has compiled six expert tips to help you win a Miami bidding war.
Tips to win a bidding war in Miami
- Figure out your budget
- Get pre-approved for a mortgage
- Consider an all-cash offer
- Offer more than the asking price
- Be flexible with non-financials
- Secure a commission rebate
- Figure out your budget
Thorough knowledge of your budget can’t guarantee you win the bidding war, but it can prevent you from offering more than you can afford. Getting excited about one of Miami's iconic art deco homes before you've mapped out your finances could lead to frustration, especially if you regret your purchase down the line.
Before you enter a bidding war, you should assess the limits of your budget to determine how much you can realistically dedicate to mortgage payments. You’ll want to factor in extra money for repairs and renovations, too.
A deep dive into your income and monthly expenses also clarifies how much you can devote to initial transactions, like the down payment and closing costs. After totaling these costs and comparing them to your finances, you’ll truly know what resources you have to work with.
Another great way to narrow down your budget is to get a mortgage pre-approval.
Get pre-approved for a mortgage
When you come to the table with a pre-approval letter, it shows the seller that you're financially qualified and serious about buying.
A pre-approval letter helps distinguish your offer from other buyers in a competitive market. Miami homeowners selling in Brickell or Coconut Grove know their homes are in demand, so you'll need to prove the strength of your offer with a pre-approval letter.
A pre-approval demonstrates that you've already spoken with a lender who's willing to give you a home loan. Lenders look at your credit score and work history to determine your mortgage and interest rates. In turn, this makes your offer stand out and gives you a specific idea of your budget.
Consider an all-cash offer
One of the easiest ways to grab a seller's attention when there are multiple offers is by offering cash.
An all-cash offer will usually have a much higher chance of beating a financed offer; as the seller typically gets their money faster than a loan mediated by a lender. All-cash offers streamline the process and provide peace of mind for the seller because there's less risk of financing issues as the deal nears closing.
Even if you don’t have the funds to pay the home’s full asking price, you may still be in luck. Buyers can appeal to sellers and their target listing’s agent by making a significant down payment. Essentially, the more cash you bring to the negotiation, the more likely you are to win the luxury condo of your dreams.
Plus, the more cash you pay upfront, the lower your monthly mortgage payment will be.
Offer more than the asking price
While you may not want to offer to pay more than the list price, it could make sense if you really want a home.
Perhaps you've always wanted to live in Miami or have other motivations like your career or family. In these situations, a home may be worth more to you than the seller is asking.
If you're willing to pay more than the advertised price, the seller will likely jump on your offer. Additionally, combining other elements, such as offering cash or coming with a pre-approval, will boost your chances of buying the right home.
Be flexible with contingencies
There may be times when you're offering as much as your budget allows, and another buyer still makes the highest bid. In these cases, you can make your bid attractive by waiving specific contingencies, if you are comfortable with the risks of doing so.
Home inspections, financing contingencies, and closing timelines can cause a lot of stress for sellers. Buyers who are flexible with these terms have a chance of persuading sellers without necessarily spending more money.
For example, if a seller needs to close on a specific timeline to have the proceeds of the sale for another purchaser, the seller will likely be happier with a fast close or the option to lease back for a short period of time.
Similarly, a home inspection may reveal some recommended repairs for the home. The seller would have to potentially lower their price or spend money to fix the issues. Your offer can become more attractive if you're willing to skip the inspection, especially if you are planning to do a big renovation after closing anyway.
Of course, if you're considering this route, you must keep in mind that you risk discovering problems with your home down the line that require significant repairs. Make sure to thoroughly check the home's features at property tours or open houses before making such a leap.
Secure a commission rebate
If you’re eager to jump into a bidding war over a particular home, you may be tempted to work with the first buyer’s agent recommended to you. But, it helps to find an agent that’s successfully navigated heated negotiations before.
Experienced real estate agents are likely to have knowledge of your target neighborhood, escalation clauses, and the area’s typical mortgage rates. Your agent also may potentially provide a commission rebate.
Commission rebates, sometimes called home buyer rebates, occur when your buyer's agent gives you back a portion of their commission after closing. This refund is a great way to replenish your savings account after putting down earnest money or making upgrades.
When you enter your bid for a home, you’ll have more breathing room knowing that you could potentially secure a rebate after closing.
Prevu currently offers the largest rebate in Florida, offering up to 1% of the purchase price through a rebate after closing. By working with a brokerage that provides a home buyer's refund, you can enter a bidding war in a calmer state of mind.
Interested in buying a home in Miami? Browse listings and see how much you can save with Prevu’s Smart Buyer Rebate.
