How I won the bidding war on a house without making the highest bid

  • We won a bidding war even though the next better bid had less money and a higher down payment.
  • We made the earnest money deposit non-refundable, so the seller could keep our money no matter what.
  • Giving up the serious money is a safe bet for the seller, because they will still get some money even if we cancel the contract.

During the two months we spent shopping for homes, my husband and I tried to buy six. More than once, we lost a show that was a little better than ours. He added salt to the wound to know we were so close, but in the end we weren’t chosen.

At attempt number six, there was another offer that was arguably slightly better than ours – but the seller picked ours anyway. Here’s how we won the bidding war.

We didn’t have the highest bid

Our offer includes Escalation clause. This means that we offered an initial amount but said we would gradually increase our bid if there was a competing bid, up to a certain amount. We received a call that our bid has been selected for the highest bid.

With an escalation clause, the selling agent must send you the competing offer to prove that they escalated your offer according to the terms in your contract and did not raise the price just because they could. When we looked at the competing offer, we found that the maximum buyer amount in second place was actually $1,250 higher than our offer. They also have 20% down paymentWhile we have only decreased 3%. But sellers still choose us.

We have made our earnest money deposit non-refundable

Previously, the selling agent told our real estate broker that sellers were looking for a combination of the high money offer, but also the safest one. To check the “Secure” box, we made our earnest money non-refundable.

deposit It is part of your

push down

To pay up front once the seller accepts your offer, kind of like a security deposit. My husband and I made a serious deposit of $10,000 and signed our offer that we lost money. This means that no matter what happened – even if we back off the sale for legitimate and legal reasons – the seller will keep the $10,000. The seller can immediately access and use the funds without worrying about having to return them to us.

You don’t have to forfeit your serious deposit if it makes you feel uncomfortable

Forfeiting your earnest money makes your offer competitive, but it is a risk. For us, we decided it was a risk worth taking because we had already waived a lot of contingencies to make our offer competitive, including lie and emergency address. So we knew we were unlikely to get our serious money back, anyway.

The $10,000 was also not the full amount of the down payment, so although losing that money would have been difficult, we wouldn’t restart from square one if we lost it.

If you are interested in giving up your deposit, you don’t have to give up your entire deposit, as we did. There are different methods you can take.

For example, we made an offer of another house with a septic tank. We said we would lose half our serious money when they accepted our offer, and the other half after a sanitation check. (We didn’t get that house, but it wasn’t because of our serious financial strategy. Someone offered a lot more money.)

But just because giving away serious money makes your offer more attractive, doesn’t necessarily mean you should. If losing that money means the end of your home buying journey or puts you in a precarious financial situation, you may decide that you’re not comfortable taking the risk — and that’s okay. I had to learn what compromises I was comfortable making in the home buying process, and which compromises I wouldn’t back down.