3 Bidding War Strategies to Use in Today's Housing Market

Bidding wars are common these days. Here's how to win one.

Buying a home today is no easy feat. Not only are property values extremely inflated, but there's also a very limited number of available homes on the real estate market. So if you do manage to find a home, you may find that you end up in a bidding war.

During a bidding war, two or more buyers duke it out over the same home. What will commonly happen is that one buyer will make an initial offer on a home, and another buyer will come in with a higher offer. That first buyer might then raise their price, and things will go back and forth until someone finally backs out or the seller finally makes a decision.

Learning how to win at a bidding war could be your ticket to buying a home in today's tricky environment. Here are three bidding war strategies it pays to use to your advantage.

1. Come in with mortgage pre-approval

Getting pre-approved for a mortgage won't guarantee you a home loan. But it could help you win a bidding war.

When you come in with a pre-approval letter, it means that a mortgage lender has reviewed your finances and determined that as long as your financial situation doesn't change for the worse, you should be eligible to borrow a given amount. If you make an offer to a seller and show that seller a pre-approval letter confirming you can afford the property in question, it could give you an edge over other buyers whose finances have not yet been vetted.

2. Be flexible with your closing date

You may find a home whose seller wants a delayed closing. Or you may find a seller who wants to close on a sale quickly. The more accommodating you're willing to be, the greater your chances of carving out an edge over the competition.

3. Write a love letter

In the context of real estate, love letters can go a long way. If you're not familiar with the concept, a love letter is a note a potential buyer writes to a seller explaining why they adore the home in question. Making an emotional appeal can give you a leg up in this red-hot housing market. It's a great way to let sellers know what you love about the home and help them look past finances.

You might, for example, write a letter telling a seller that the layout of their house works perfectly for your growing family. If that seller has children, they might decide they'd specifically like to sell their home to another family. Best of all, love letters don't cost anything -- other than a little bit of your time.

Sometimes, the key to winning a bidding war is to offer up the highest price for a home. But some sellers look beyond money when deciding which buyer to work with. So following these tips could be your ticket to getting your offer accepted the next time you find a home you love and another buyer tries to get in your way.