How To Win A Bidding War On A House

Buying a home in a seller's market will inevitably end up in a bidding war against other home buyers. This is especially true in the Colorado hot market we have today where it isn't uncommon to have 5 or even 10 other bidders on the same home! These bidding wars are even more common for homes at the lower price range. This is due to the rapidly raising prices in the housing market making the lower end very competitive. Below are a few great tips to help make your offer the best offer among the crowd and allow you to secure your dream home!

Auction Hammer

Escalation Clause

Escalation clauses tell the seller you are willing to outbid other home buyers. It works by stating that you will beat any other offer's price by a set dollar amount. This is hugely beneficial to the home buyer since you will only pay let's say $5000 over the next highest offer. This prevents the home buyer from stating they'll pay $650k for a property that the next highest offer was only $620k.


There are lots of contingencies that can go into a home purchase contract however the most common ones are home inspection contingency and appraisal contingency. These contingencies don't have to be entirely waived but they can be weakened making a stronger offer to the seller. One example is that the home buyer puts in writing they won't ask for any home repairs that cost more than $2000. Another is that the home buyer will cover the difference if the appraised price comes under the home purchase amount up to $10,000. These contingencies will make your offer stand out especially when there is a competing offer with a similar purchase price.

View the home multiple times

In a hot housing market, it isn't uncommon for homebuyers to get caught up in the excitement and bidding wars and extend themselves beyond what they actually feel comfortable with. The buying process can be quick and can lead to cold feet. Smart Realtors on the seller's side know this and look for home buyers that have viewed the home multiple times. This means the home buyers have had the time to fully take in the home including the negatives. This will end up with a home buyer who is comfortable with the transaction and will follow it through to the closing table.

Personal Letter

Homes are a personal item and are an emotional connection. Homeowners generally want to ensure their home goes to a nice family and ensure it isn't going to be scraped. This letter also confirms that the home buyer wants the home and won't get cold feet. Personal letters can make the emotional bond with the home seller to ensure them that their home will bring as many happy memories to a new family that it did to their own.


Preapproval and prequalified are often mixed up. The prequalified offer shows what a home buyer can afford what they have verbally told a lender. A preapproval shows what a home buyer can afford after their documents such as pay stubs, W2's, and more, have been reviewed by the lender. These preapproval letters help strengthen the offer by ensuring the home seller and their real estate agent that you won't have any issues qualifying for a home loan.

Down Payment

The larger the down payment, the less difficult it will be for a home buyer to close on a house and qualify for a loan. Saving up before purchasing a home can go a long way. This will help your bidding war and also allow your lender to give you a lower interest rate.

Highest Bid

The most common way to win a bidding war is to submit a higher offer than anybody else. This will often mean going above the asking price for the home. Your real estate agent can help run a comparative analysis on similar home sales in the real estate market. This will help you understand what the home is really worth. Unfortunately, many homes are listed significantly below the price they are worth to lure in as many potential buyers as possible.

Cash Offer

Cash offers waive any type of financing contingency and there is no concern of a lender not preforming. The cash offer can also allow for a quicker closing date due to not waiting for a lender to underwrite the mortgage. This allows for the home seller to get their money quicker and make less mortgage payments. The saying goes "cash is king" for a reason.

Rent Back Agreement

Money home sellers will still need to move out from their home. Writing a rent back agreement will give the home sellers time to pick up and leave. This convenience especially if they haven't found a new home yet can be vital.

Earnest Money

Earnest money is to ensure that the home buyer is serious and protects the seller if the buyer backs out of the deal without just cause. Putting down a higher earnest money deposit can show a home seller that your serious and won't back out of a contract.

Using a great lender

Lenders are more than just about getting a good mortgage rates, a good lender will help you stand out in a competitive market. This includes the lender calling the listing agent to ensure them that they can close on time.

Do sellers ever accept first offer?

Sellers often accept the first offer on their home. Many sellers are motivated to sell their home on a quick timeline and also understand that the longer their home sits on the market the more likely that somebody will think there is something wrong with it.

Do sellers always pick the highest offer?

Sellers do not always pick the highest offer. Although this is ideal for your "normal" home seller, there are lots of motivations somebody has when selling a home. A home buyer can stand out if they write a clean offer with a preapproval letter and minimal contingencies. This will ensure the home seller that the buyer is serious and has a high chance of completing the transaction. There are also many home sellers who are trying to buy and sell their home at the same time and would gladly take a rent back agreement so they can find their new home.

How low is a lowball offer?

A lowball offer is often something that is 10-15% less than the list price of the home. This however is a guideline and there are many homes that are overpriced on the market and really should sell for this amount. It doesn't cost anything to place an offer on a home and will give you an idea if the home sellers are willing to accept or counter the offer.

Utilizing a variety of these tactics can help make your offer gain the upper hand. A great buyers agent can help you craft the proper offer to get your dream home!

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