February 9, 2024
Who we are
Susie Chow is Tomo’s lead writer based in Atlanta, Georgia. We present our first-ever Tomo’s Guide to Home Buying, broken into five sections, as a tool for all homeowners. Susie is also a contributing writer for Eater Atlanta, and has written for global brands, Shangri-La Hotels & Resorts, Airbnb, Uber, and many more.
In this Section: Tips for Successful House Bidding
When it comes to buying a house, making an offer is a big deal. It’s a mix of excitement and stress, and it’s essential to approach it with a clear head to avoid common mistakes like overpaying. In Part 4 of Tomo’s Guide to Home Buying, we’ll run through how to make a successful offer — whether you’re in an (unfortunate) bidding war or making a straightforward house bid.
Crafting Your Offer Letter
When you find a home that checks most of your boxes, it’s time to make a formal offer. Your offer letter should include:
- Offer Price: The amount you’re willing to pay for the house.
- Contingencies: Conditions the seller must meet for the deal to go through.
- Down Payment: The cash you’ll pay upfront.
- Earnest Money: A good-faith deposit, typically 1-2% of the purchase price, to show you’re serious.
- Closing Costs: Additional costs due at closing.
- Timeline: Your preferred closing date and, if applicable, the sale of your current home.
Tomo’s Tip: Make sure to include a pre-approval with your offer. One way to make your offer stand above the rest is to ask your lender to underwrite the pre-approval, which essentially means you are all but guaranteed to be approved for the loan. One last thing, ask your lender to call the listing agent and vouch for you!
What Happens Next?
Once your offer is submitted, the seller will respond within the timeline you set. The response could be:
- Offer Accepted: Congratulations! Move on to next steps — applying for a mortgage.
- Counteroffer: If your offer is close to the seller’s expectations, they may make a counteroffer with a modified proposal.
- Competitive Situation: In a hot market, you might face a bidding war on the house. Sellers might allow incremental bids or request the “best and final” offer from all interested parties.
- Offer Rejected: If there’s no counteroffer, your bid was likely too low. You can reassess and try again if you’re particularly interested in the property.
Tomo’s Tip: Consult your agent and lender on what contingencies are included in the offer to see if there are any that can be removed to make your offer more appealing. Oftentimes sellers are motivated to move quickly to buy their next house, if you can close quickly, you may stand out! An escalation clause is a way for you to have an extra chance to outbid the competition if your original offer is not the winner, ask your agent about this!
Bidding on a House: Key Tips & Considerations
- Rule of Thumb for Making an Offer on a House: Always consider the market value and avoid emotional bidding.
- Bidding on a House: In competitive situations, decide in advance how high you’re willing to go.
- House Bid Strategies: If it’s a seller’s market, consider making a strong initial offer.
- Avoiding Overpaying: Be aware of your budget and the property’s value to prevent getting caught in an overzealous bidding war on a house.
- Expert Tip: Keep your contingencies to a minimum to make your offer more attractive, but don’t waive essential ones like home inspection.
Bidding on a house is indeed a critical phase in the home buying process, and with these tips and strategies, you can approach the process with confidence and clarity. And remember, Tomo — the world’s first complete home buying service — is here to guide you every step of the way.
What’s Next? Part 5: How to Get a Mortgage
- How long does it take to close on a house
- How to get a loan for a house
- Essential documents and information
- Home appraisal and inspection
- Homeowner’s insurance and title search
- The decision and closing
- Congrats! You’re a homeowner
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