How to Buy a House Competitively Without Overpaying
Posted on Dec 29, 2014
Buying a house can be extremely frustrating. The current system in place is full of issues that allow shady, unethical practices to take place. Unfortunately, changing the system isn’t easy and definitely not in the best interest of those who stand to benefit from such issues, e.g. conspiring real estate agents who artificially lie about a buyer’s competition or who hide purchase offers from sellers for personal gain. One strategy you can use to outbid competing buyers without paying much more than them is to include an escalation clause in your offer that works along the following lines:
OFFER PRICE AUTOMATIC INCREASE CLAUSE
- If my offer price is not the highest, my offer price will automatically increase to $5000 more than the current highest offer
- If my offer price is automatically increased to $5000 more than current highest offer and my offer is selected by the seller, I will have 1 hour to decide if I am willing to accept my automatically increased offer price.
- If I decide to accept my automatically increased offer price, seller will provide me with copies of all bona fide competing offers so that I can verify they were legitimate offers.
With this clause and contingency in place, you no longer have to worry about whether you offered too little or too much. However, it only works if none of your competitors are also using this clause since in that case, you’d end up in an infinite loop and your offer price would keep increasing to infinity.
Other types of contingencies include
- appraisal contingency
- financing / loan contingency
- inspection contingency
- house sale contingency