Cash offers are overwhelmingly the top way for home shoppers to emerge as a victor in a bidding war. An all-cash offer tends to double a buyer’s odds of getting their offer accepted when in a competitive buying situation for a home, a new study from the real estate brokerage Redfin shows.
Followed by cash offers, writing a personal letter to the seller is the second most effective strategy to winning a bidding war, the brokerage found. Writing a personal letter to the seller can increase a buyer’s odds by 59%. Waiving the financing contingency can increase a buyer’s chances by 20%, which is down from 58% in 2017, the study finds.
Researchers found that waiving the inspection contingency did not significantly improve a buyer’s chance of making the most competitive offer in a bidding war.
Redfin researchers analyzed the most popular bidding war strategies among thousands of offers Redfin agents wrote on behalf of their homebuying customers over the last two years.
bidding war strategies chart. Visit source link at the end of this article for more information.
“A couple years ago, the market was much more competitive than it is now,” says Daryl Fairweather, Redfin’s chief economist. “Sellers might have had multiple cash bids to choose from, and the offer price more often ended up being the determining factor. Now that bidding wars are less common, an all-cash offer is often enough to make an offer the winning bid. Sometimes, financed offers fall through because the lender decides the buyer can’t afford the purchase or the buyer is too risky a customer. Especially in a less competitive market, sellers value an offer they know isn’t dependent on financing.”
Overall, bidding wars have fallen to a decade low. Only 13% of Redfin offers faced competition from January through September of this year, down from 55% during the same period in 2017.