When it comes to bidding wars, cash is king according to a new report released Monday from Redfin.
Homebuyers who offered cash were 334 percent more likely to win a bidding war than those who choose to finance the purchase, while those who waived the financing contingency and conducted a pre-inspection were 31 and 25 percent more likely to win bidding wars, respectively, according to the report.
With historically tight inventory leading to a new high in bidding wars amid the spring homebuying season, it’s more important than ever for buyers to know what strategies will help them come out on top.
January 2022 is on record as the most competitive month recorded by Redfin, with 70 percent of homes handled by Redfin agents resulting in bidding wars. Last year saw 30 percent of homes sell above list price, while the most recent data shows 43 percent of homes sold above list price in February 2022.
While some predictions saw bidding wars fading as more inventory came online, the market is now mired in uncertainty.
Agents should be prepared to coach their clients through the bidding war process and prepare them for the price escalating significantly above asking, the report states.
“I let buyers know what to expect and try to prepare them, financially and emotionally. The home they’re touring will probably sell for significantly over asking price,” Fort Worth, Texas-based Redfin agent Amanda Peterson said in a statement.
It’s also up to agents to advocate for their clients, according to the report.
“If a buyer has a low down payment or another scenario that doesn’t typically win a bidding war, I’ve had success explaining buyers’ unique situations to the listing agent and making it clear that their finances are reliable and the deal will close,” Peterson said.
Buyers who are unable to make a cash offer may also want to consider other strategies like waiving the financing contingency and conducting a pre-inspection to make their offer stand out, according to the report.
