Columbus home buyers who are frustrated by being out-bid may be tempted to try risky, over-the-top clauses in their purchase offers. As home buyers turn to social media for new bidding war strategies, these ideas are gaining ground around the country.
These risky strategies might work, but you would literally be winning the bidding war “at all costs” – namely yours! Please keep in mind that these tactics have been promoted by agents who represent the sellers.
As Exclusive Buyer’s Brokers who look out for the buyer’s best interests at all times, we do not recommend these.
Automatic escalation clause: when used in a purchase offer in a bidding war, this states that the buyer will automatically exceed the highest qualfied offer by a set amount. Depending on the local market, this could be an additional $2,000 to $10,000 or more. In theory, it’s impossible to be out-bid because you would automatically have the highest offer on the table.
Of course, if another buyer has an automatic escalaction clause and has a higher exceeding amount, you could still be out-bid.
Even if you “win” you have committed to a price higher than what any other buyer could support. You would also need deep pockets to cover any amount above what your mortgage financing would handle. Which brings us to the next concept:
Appraisal gap guarantee clause. This clause states that if the mortgage company appraisal comes in for less than the sales price, the buyer promises to cover the difference in cash. In other words, the seller doesn’t have to give an inch! It’s a great deal for sellers, but it literally puts buyers “underwater” in equity on day one.
No matter how “hot” a real estate market might be, home buyers should not lock themselves into clauses that place them at a serious financial disadvantage. It is never in your bests interests to overpay for a home!
Instead of tactics like these, we recommend you read our free e-book, “How to Buy a Home like a Pro,” and utilized our time-tested strategies that work in all market conditions! Better yet, become our Buyer-Client and get the best home buying representation in the business. We can help you craft a compelling offer without putting your financial interests at risk.
As your Exclusive Buyer’s Broker, we serve your best interests at all times! Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.
Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!
Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!
Andrew Show
Exclusive Buyer’s Broker, CEBA-M, MCNE, CSP, PSA,e-PRO, CREM, ABRM, AHWD
Buyer’s Resource Realty Services www.BuyersHome.com
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax
