How to Win a Bidding War on a House

A bidding war can happen quickly and escalate rapidly. It’s a potentially frustrating situation for buyers, where increased competition and multiple offers make it more challenging to finalize the deal. 

The trick to winning a bidding war is crafting an appealing offer that includes factors beyond the sale price. The buyer with the highest bid may not always win if the seller prefers the terms of another offer. Put yourself in the seller’s shoes and be willing to compromise if you want to come out on top.

Though home prices and interest rates have dipped slightly since last year, it hasn’t made homebuying much easier. Housing supply hasn’t kept up with demand, fueling fierce bidding wars when buying a house. An August 2024 report from the National Association of Realtors (NAR) showed that 60% of homes sold in less than a month, highlighting strong demand, and 20% sold for more than the asking price.

Wendy Forsythe, a licensed real estate agent and chief marketing officer at eXp Realty, says that you must be ready to act quickly. Plus, “there are other strategies that can be woven into the negotiation process to strengthen your offer,” she says.

Here are 10 of the best strategies to help you win a bidding war on a house:

• Submit an all-cash offer
• Consider waiving contingencies
• Offer a quick closing
• Limit (or even waive) inspections
• Let the sellers stay a little longer
• Get preapproved for a mortgage
• Mind the appraisal gap
• Target the right homes
• Hire the best pros to help you
• Offer above asking price

We’ll go over each strategy in greater detail below.

When buying a home in a competitive market, you need to know what – and who – you’re up against. If you haven’t already, research these three angles of your local housing market.

• What are the neighborhood trends? Look at average home values, price per square foot, and number of days on the market. You may also see the average months of supply and the median discount from the first listing price to get an idea of how tight the market is. The lower the supply, the tougher the competition is likely to be. As a first step, ask your real estate agent for a comparative market analysis or get pricing information on a specific property with a Home Valuation Report.
• What properties are the hottest? Identify hot properties that are likely to attract multiple offers. Look for desirable locations, unique features, or below-market pricing. If it’s appealing to you, chances are it’s also appealing to multiple buyers. You can decide whether to throw your hat in the ring or keep looking for less competitive properties.
• What are other buyers offering? Are other buyers offering over asking or making all-cash offers? This information could affect how you craft your offer. Also, consider whether investors are actively buying in the neighborhoods where you want to buy. Data from Core Logic showed that 23% of properties purchased in the second quarter of 2024 were bought by investors (down slightly from 30% in Q1). Since investors typically make cash offers, keep that in mind when crafting your own. 

You’re up against competitive buyers but can still craft a winning offer. Here’s how.

If you can pay in cash, do it. That eliminates the hassle of hoping for a smooth closing with your mortgage lender. It’s OK if you don’t have the funds for an all-cash offer; there are other things you can do to sweeten the deal.

Be mindful of adding contingencies to the purchase offer, such as a home sale and home inspection contingencies. While these clauses are intended to protect you, they could weaken your offer if another potential buyer is willing to waive them. You don’t have to forego all contingencies but use judgment when you’re in a competitive situation. 

Anything you can do to make life a little easier for the seller will help your case, so consider offering flexible closing dates.

“Offer flexibility when negotiating terms, such as offering closing date leniency so the seller can pick a date that works best for them,” Forsythe says. Some mortgage lenders guarantee on-time closings, which would be a plus. 

Another effective strategy, but one you must use carefully, is to limit inspections. You might offer to shorten the inspection period or specific inspections, such as radon or termite inspections. You could also offer a home inspection for informational purposes only, giving you details about the home but not obligating the seller to make repairs. 

The key is to remember that inspections can uncover problems you really need to know about, so be cautious about waiving them altogether.

If you’re renting right now, you might be able to offer extended seller possession or rent-back terms, letting the seller stay in the home a little longer. That could give the seller extra time to pack their belongings, arrange a move, or wrap up things at work or in their community. 

A rent-back agreement could allow the seller to stay for 30 or 60 days, for example, in exchange for a predetermined rent. Always work up an agreement in writing, and make sure your mortgage lender is aware.

If you can’t offer all cash, ensure you’re pre-approved for a mortgage. This shows that you’re serious and have the financial capability to buy. 

Choose a lender with a great reputation in your area. Some mortgage lenders even offer special programs to help buyers get a leg up, such as upfront underwriting and verified approvals. You can also increase your earnest money deposit to make your offer more appealing.

If the home appraises for less than the sale price, you might be inclined to renegotiate the offer. But when you’re trying to win a bidding war, that could be enough to lose the sale. Instead, consider alternatives. You may need to cover the difference yourself to close the deal.

Position yourself to win by targeting the right homes. Instead of jumping on popular listings, consider whether you might have better odds bidding on a property with longer-than-average days on the market, for instance, or one that’s ugly but fixable. A renovation loan could give you the necessary funds to fix it up.

Finally, in addition to choosing the right mortgage lender, an experienced real estate agent can turbocharge your ability to make a compelling offer.

“An agent brings valuable negotiation experience coupled with local market knowledge,” Forsythe says. “Ultimately, these insights will help you establish an offer that aligns with the home’s market value as well as your budget,” she continues, “resulting in a strong, but fair, offer that will best help you win your home.”

You can make your offer more attractive by offering above the asking price, but other potential buyers may also use this strategy. You also don’t want to overpay for the house and offer more than what’s necessary to win. To combat this, you can include an escalation clause, which automatically increases your bid by a set amount if another buyer is willing to pay more than your initial offer. 

Here are two additional strategies that might help you win a bidding war:

• Personalize your offer: With some sellers, you may be able to connect on a more personal level through a personalized letter. “A personal offer letter can help you provide context to the seller around your homebuying journey and what makes their house so special to you,” Forsythe says. “However, you do have to be mindful about the language used within your note, as the National Association of Realtors have cautioned against revealing information that could result in housing discrimination.” 
• Consider seller financing: Agreeing to finance the home through the seller instead of a traditional mortgage lender might appeal to some sellers. Seller financing might include a lease-purchase arrangement, where you make payments until you own the home in full. However, seller financing does not have the same protections as traditional mortgages, and you don’t receive the title until you’ve paid the home off completely.

Understanding that there are multiple ways to win a bidding war can give you an edge when shopping for a home. When working with your real estate agent to craft a purchase offer, try to strike a balance between protecting your interests and winning in a highly competitive market. 

You may be able to compromise on a lot, but there is risk involved if your offer is too aggressive. Make sure you have cash on hand to cover things that were overlooked during the bidding process, especially if you decide to waive the home inspection contingency. Most importantly, remember to stay calm. If this sale doesn’t work out, another one will. 

“You’re shopping for your home, and even if it takes some extra time, the right one will come along,” Forsythe says. “As you navigate the process, keep your end goal in mind, and reconsider your non-negotiables as needed.”