Learn how to win a California home bidding war. The housing market is “hot” in California. A sellers’ market due to low inventories of homes for sale.

Buying a home is more complicated and expensive with bidding wars all over California. Don’t get carried away by out-bidding other home buyers as you may end up paying more than you should.

It’s better to research, set boundaries, and become strategic.


Follow these 12 strategies to win a California home bidding war


1. Know the Neighborhood


If you don’t know the neighborhood you won’t know what to pay. Some neighborhoods contain popular housing types and styles. Some neighborhoods are more expensive. Each neighborhood has unique amenities.

Researching the neighborhoods helps you avoid those out of your price range. Research shows you the ones with the right location for your lifestyle tastes and budget. Once you know the top neighborhoods to focus on your property search becomes simpler.


2. Establish Relationships in Advance


Establish a relationship with a local well-known experienced Realtor like Big Block Realty for the greater San Diego area. Also, ask your Realtor for recommendations for local lenders or a mortgage broker. You will need these relationships in your future bidding wars.


3. Get Pre-Approved for a Loan


Before looking at homes, work with your Realtor to meet a lender or mortgage broker to get a “pre-approved” mortgage loan letter. This letter tells sellers that you are qualified for a mortgage loan which gives them confidence you can buy the home.

Learn about “pre-approved” loan letters by viewing our blog posts titled: “Improve Your Chances For Home Loan Approval”.

In essence, the lender will look at these important factors to qualify you for a mortgage:

  • Your credit score;
  • Bank statements;
  • Employment history;
  • Current income;
  • Current debts; and
  • Debt payments history.

Your credit history is sent to FICO (Fair Isaac & Co.) which gives a credit score. Your credit score is a number ranging from 350 to 850. The higher the score, the better odds for loan approval and a lower interest rate for your mortgage. Low scores make lenders feel you are a risk requiring a higher interest rate.

Your current income, debts, and payment history show your ability to repay the loan.

Preapproval also helps you by knowing:

  • How much the lender can offer you;
  • How much are your monthly payments; and
  • What mortgage options are available to you.

View our blog post about credit scores titled: “How To Successfully Buy A Home”.


4. Make Strong Offers


You must stand out in a bidding war. If you know of slightly higher offers from other buyers you can’t match, offer a larger Earnest Money Deposit (EMD). This shows the seller you are serious and financially stable.


5. Write a Personal Letter


Include a personal letter with your offer to the seller. Tell your story about why you want his or her house to create an emotional connection with you.

Focus on what the home will do for you like it may have done for the owner. Raising your children in this home and how you look forward to enjoying the home as the owner did for many years. Yet, don’t make the letter too much about you. Rather, remind the owner about the happy years in the home.


6. Include an Escalation Clause


A strong offer could include an escalation clause by agreeing to increase your offer if a higher bid comes from another buyer. However, make sure to include a cap on the total amount you will pay. This avoids spending more than you want. It also puts a limit on a bidding war where you walk away. Never overspend.


Speak with a Big Block Realtor


7. Dropping Contingencies


A “contingency” occurs when you make an offer to buy a home depending on certain conditions before the sale can conclude. For instance, your offer is contingent on the appraisal confirming the sales price is fair market value, If the appraisal is less, you can walk away or renegotiate a lower price.

Types of contingencies you may consider dropping are:

  • Financing where you make an All-Cash offer;
  • Contingent on the sale of your current home; or
  • Home inspection.

Sellers prefer no contingencies. Yet, most buyers include contingencies in the sale and purchase agreement. Thus, if you drop one contingency it might make the seller favor you over the competing buyers.


8. All Cash Offer


As mentioned above, you can drop the financing contingency if you come up with enough money to make an all-cash offer. Financing takes time and gives a buyer a way out if financing fails. Why wait months for closing when an all-cash offer only takes a couple of weeks?

All cash offers trump contingencies based on financing.


9. Act Fast


Speed wins in bidding wars. The internet speeds up home sales nationwide. Some homes sell on the same day of listing.

If a home you like becomes available in a seller’s market act fast. Don’t wait for other offers or an open house. Forget about making a low-ball offer. Quickly evaluate the home to make your own decision about wanting it and at what price. You may only get one chance.

If the right home enters the market go after it fast.


10. Consider Buying As-Is


Sellers don’t like red flags indicating a buyer is difficult to work with. Too many contingencies kill deals. Agents and sellers shy away from difficult buyers even when the offer is sizable.

Preview the house from top to bottom as fast as you can and bring a contractor to advise you. Your contractor should recognize a money pit or a home in good condition. Some sellers may take a lower price offer for a no-hassle fast closing.

View our recent post about: “How To Avoid Buying A House Needing Major Repairs”.


11. Be Flexible


Express your willingness to work with a seller’s requirements and timetable. Flexibility goes a long way with making a deal.

For instance, if the seller needs to remain in the home after closing offer a “rent back” meaning you will become a temporary landlord until the seller moves out. Always make the seller put the moving date in writing.


12. Don’t Quit Trying


Don’t let higher bids intimidate you. Sometimes offers fail, contingencies kill sales, or the other buyer finds a better house. Never bid more than you can afford. Knowing your financial limitations keeps you out of an emotional bidding war.

It’s better to bid and lose than overbidding and overpaying.  

If you lose the bid, make a backup offer in case the original bid fails to close. If it closes, keep looking as other opportunities always arise.


How To Win A California Home Bidding War – Conclusion


In a hot seller’s market, the rules change on how to win a California home bidding war.

In the past, bidding wars usually occurred with low-end properties. Yet, during the current seller’s market luxury homes often end up in bidding wars.

Remember these 12 suggestions:

  1. Know the neighborhood;
  2. Establish relationships in advance with a Realtor and lenders;
  3. Get pre-approved for a loan;
  4. Make strong offers;
  5. Write a personal letter to the seller;
  6. Include an escalation clause over higher bids;
  7. Dropping contingencies so the seller favors you;
  8. All-cash offer means a faster closing with no hassles;
  9. Act fast or lose opportunities;
  10. Consider buying As-Is after previewing a home with a contractor;
  11. Be flexible to work with a seller; and
  12. Don’t quit trying by making a backup offer and keep looking.

In essence, use bid winning strategies. Research neighborhoods to know the market. Outsmart the competition without overbidding.


Establish A Relationship with an Experienced San Diego Realtor


If you are thinking of buying a home in San Diego County get in touch with a local Realtor now. All the 12 suggestions above become easier when working with a Big Block Realtor.

Contact us now to start your search for a San Diego home and win a bidding war for your favorite home.



Steven Rich, MBA – Guest Blogger



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