Win a Bidding War on a House with These Proven Strategies

It’s a rush to get that feeling in your gut that you’ve found your next home. It can take months of viewings to get there. So, you make an offer with your fingers crossed. But… your offer wasn’t accepted. Instead, you find yourself in a bidding war! A bidding war occurs when multiple buyers compete for the same property by increasing their offers, often in a seller’s market with low housing inventory and high demand. So, how can you win this bidding war?

You weren’t the only one who got that gut feeling when you walked in. (Shoot.)

Bidding wars can be an emotional yo-yo. While high emotions are understandable, they can lead you to sleepwalk into mistakes that hurt your offer. Or, you could win the bidding war, but feel like you lost because the closing costs were much higher than expected. And you don’t need that when home prices are at a record high. The current housing market, especially in a seller’s market, is driving the prevalence of house bidding wars as buyers compete for limited inventory.

Nobody wants to lose a bidding war or be left with buyer’s remorse. So, it’s important to stay cool and focus on proven strategies that help your offer stand out.

If this sounds like something you need help with, you’re reading the right blog. Let’s get into it…

Why Bidding Wars Happen in Today’s Market

20% of homes received multiple offers in June 2025.

While the numbers are down from last year, millions of Americans still find themselves in bidding wars. There are many reasons for this, but I’ll keep it simple.

In a nutshell, it’s because the US has low housing inventory and high buyer demand. This creates a seller’s market, making the real estate market highly competitive.

In a competitive market, multiple buyers often submit competing bids on the same property, frequently driving the final sale price above the list price.

Understanding local market conditions is crucial for buyers hoping to succeed in a bidding war.

A few reasons why we have low housing inventory and high buyer demand:

1. Mortgage rates: Millions of homeowners are locked into mortgages with interest rates far lower than today’s. So, it makes sense to stay put and avoid the hassle of searching for a new home and crunching numbers to make sure you can cover the average closing costs, etc.

2. Years of underbuilding: US levels of home construction haven’t bounced back from the levels they saw before the 2008 Great Recession.

3. Construction costs: Labor shortages, rampant inflation, land and labor costs have pushed up the costs of construction.

4. Millennials are buying: Millennials are the largest generation in US history. And now they’re at the age range where most people buy property.

5. Tough rental market: Buying has become more appealing as renters are fed up with high rent costs. Many are looking to buy a home as the monthly mortgage payments aren’t too different.

6. Remote working has changed the market: The number of remote workers has shot up since COVID-19. It has influenced where people want to live and the types of homes they live in.

In addition, the first few months of summer always see a spike in home sales. Plus, there are always hot spots popping up with low housing inventory and high buyer demand.

A quick note on interest rates:

Low interest rates fire up buyer urgency. And that leads to, you guessed it – more bidding wars. The Fear of Missing Out (FOMO) triggers thoughts of moving home for many. The closing costs for buyers are easier to swallow if they can secure a great interest rate.

So, that’s how we got here. Now, let’s focus on tips you can use to win your bidding war, starting with understanding your full budget and estimating closing costs .

Step 1: Know Your Budget and Get Pre-Approved for a Mortgage

Home sellers crave as much assurance as they can get. They may have doubts over every offer that comes in. So, the goal is to remove as much doubt from your offer as possible. Just like you, they have a lot on the line. Home sellers are allergic to time-wasters and anyone who seems out of their depth. The last thing they want is to see an offer fall apart weeks into the process. So, the first steps are to know your budget and then get pre-approved.

Being financially prepared is essential in a competitive market, as it shows sellers you are ready and able to move forward quickly.

“How much should I budget beyond the listing price?” – says every first-time buyer.

Average closing costs are 2%-5% of the home’s purchase price. And of course, if you can budget more than that – great! Once you’ve factored in these expenses, it’s also worth considering the cost of insuring your new home to protect your investment and avoid surprises down the line.

You may also want to explore different financing options like a Home Equity Line of Credit (HELOC) to compare lending terms, interest rates, and flexibility.

Getting pre-approved for a mortgage shows sellers you are a serious buyer with the financial backing to close the deal. Pre-approval involves a lender thoroughly reviewing your credit, income, and assets, making it more robust than pre-qualification. Having a pre-approval letter demonstrates your financial backing and can strengthen your credibility as a buyer with sellers in a competitive market.

A quick note on the average closing costs to expect:

• Closing costs for buyers: The home buyer typically pays for home inspections, appraisals, land surveys, lender’s title insurance, loan fees, attorney fees and prepaid taxes/insurance. Buyers should also budget for a down payment, which is a significant upfront cost in addition to closing costs, and explore ways to get closing costs waived or reduced through negotiations with lenders and sellers. Earnest money deposits typically range from 1–3% of the home price, demonstrating the buyer’s commitment.
• Closing costs for sellers: Real estate commissions (~5%-6%), escrow fees (usually shared ~1%), owner’s title insurance, transfer taxes – sometimes a home warranty as a further incentive.

**Note:**These are potential costs. The estimated closing costs by state differ too. Rates can vary, so check closing costs by state before making an offer. Escrow fees can also be split between the buyer and seller.

Step 2: Make Your Offer Stand Out Beyond the Price

Alright, now we’re getting serious. How do you get your offer to stand out in the pack?

Your offer needs to reduce as much doubt in the seller’s mind to make them feel confident that the sale will go through smoothly. In competitive markets, even small presentation details matter—some buyers now include digital offer packets or disclosures created with tools like a QR code maker to give sellers instant access to documents and supporting information. The last thing they want is to spend time moving forward with an offer, only for the deal to fall apart weeks down the line.

Anything you can do to make the process easier or reduce closing costs for sellers will sweeten the deal. Establishing clear communication channels and being available to both the seller and their agent can help build trust and confidence in the transaction. Being accessible and responsive to the seller’s agent also demonstrates your commitment and reliability.

How to make your offer stand out:

• Determine a competitive offer price: Base your offer price on market research and recent sales in the neighborhood. A strong offer should be competitive based on current market conditions to increase your chances of winning.
• Submit a competitive offer and stay competitive: Respond quickly to new listings and be flexible with your terms to stay competitive in a hot market.
• Put down a bigger earnest money deposit: Money talks. A bigger earnest money deposit shows that you’re a serious buyer and demonstrates your financial strength and commitment to purchasing the home. The standard rate of earnest money differs, depending on the state of the market. When it’s slow, 1%-2% is expected. When it’s high, people can go as high or higher than 10%! As gambling companies say, only risk what you can afford to lose if anything goes wrong—and pay attention to signs your offer will be accepted so you’re not tying up cash on a long shot.
• Set a flexible closing timeline: Flexibility can make sellers’ lives easier. They might have some difficult commitments to juggle and can’t commit to a strict deadline.
• Offer extra days of seller possession: Allowing the seller extra days to stay in the home after closing can sweeten the deal and make your offer more attractive, but it may also lead to situations where the seller wants to extend the closing date, so be sure you understand your options before agreeing.
• Wave minor contingencies: If you can live with a few minor repairs to take care of, this could help your chances. It makes life easier for the sellers.
• Set an offer deadline: Establishing an offer deadline can create urgency and encourage the seller to accept your offer before considering others.

“What about sending a letter to the seller?

Letters to homesellers are also known as “love letters,” “buyer letters,” or “personal letters.” A personal letter or buyer letter is a heartfelt message to the seller, often included with your offer, to establish an emotional connection and add a personal touch. An offer letter, on the other hand, outlines the terms, contingencies, and earnest money deposit of your bid. While adding a personal touch can sometimes influence the seller’s decision, keep in mind that in many markets, sellers may prioritize financial strength and terms over emotional appeals. But also, although it’s unpleasant to think about, sharing information about yourself could give people reasons to discriminate against you. Reaching out to the seller could also complicate things for them and the real estate agent as it could violate the Fair Housing Act.

My advice: Understand the pros and cons of sending letters. If you accept them and still want to write a letter, do so at your own risk. There are many other ways to make your offer the most appealing in a stack to win a bidding war, especially if you’re considering leveraging the strength of a cash bid.

Step 3: How to Use Contingencies Strategically

Waiving contingencies is common in a real estate bidding war, especially when multiple potential buyers are competing for the same property. Waiving contingencies—such as the appraisal contingency and inspection contingency—can make your offer more attractive to sellers by reducing obstacles and showing you are a serious potential buyer.

Offers with fewer contingencies are often preferred by sellers, as they present a lower risk of the deal falling through and can help the seller meet their timeline. Waiving contingencies can also demonstrate your willingness to close the deal faster than other buyers.

What Contingencies Can You Waive?

Common contingencies that buyers may waive include the appraisal contingency and inspection contingency.

Waiving the appraisal contingency means you agree to pay the difference if a low appraisal comes in below the purchase price, which can be a deciding factor in winning a bidding war. However, it’s crucial to consult with a loan advisor before waiving the appraisal contingency to fully understand the financial implications and how selling or buying above the appraised value works in your market.

Skipping the home inspection contingency can be risky, as it may lead to purchasing a property with hidden issues that require costly repairs. Modifying the inspection period—such as shortening it—can also make your offer more competitive without fully waiving your right to inspect.

Remember, the deciding factor in a real estate bidding war is not always the highest bid.

Flexibility with the seller’s timeline or your willingness to bid higher can also set your offer apart. Escalation clauses can automatically increase your offer in response to competing bids, helping you stay ahead of other buyers without constantly revising your offer. Understanding the market value of the home is essential when deciding how much to bid higher in a competitive scenario.

So let’s explore some common tactics that make your offer more appealing to sellers.

The appraisal gap strategy

The appraisal gap is when a property’s professional appraisal value is lower than the price the buyer has agreed to pay. This situation is known as a low appraisal. It’s a problem as lenders only approve loans for the home’s appraised value, not what the buyer has agreed to pay. And that’s “the appraisal gap.”

The appraisal gap strategy often involves waiving the appraisal contingency, which is a clause that allows buyers to back out or renegotiate if the appraisal comes in low. By waiving the appraisal contingency, the buyer agrees to pay the difference if there is a low appraisal, making the offer more attractive to sellers. Buyers with access to flexible financing, such as a Home Equity Line of Credit (HELOC), may find it easier to navigate these shortfalls without restructuring their primary mortgage. However, it is crucial to consult with a loan advisor before waiving the appraisal contingency to fully understand the financial implications. Waiving contingencies in general can strengthen your offer and help you win a bidding war by providing more certainty to the seller. This makes your offer more appealing as you are mitigating a common issue that causes deals to fall apart.

Skipping the inspection entirely

This is a super high-risk move that became common during COVID-19 as many people were in an urgent rush to move ASAP. Skipping the inspection means waiving the inspection contingency, which is a protective clause in home sales contracts that allows buyers to cancel or renegotiate if the home inspection uncovers significant issues. While it speeds things up for sellers and removes lots of hassle, skipping the home inspection contingency can be risky, as it may lead to purchasing a property with hidden issues that require costly repairs. This is only a recommended option for buyers who have the finances to deal with any potential major defects that appear after the viewing.

Alternatives: Pre-Inspections and Capped Repair Requests

• Pre-inspection: With the seller’s permission, you can arrange a pre-inspection before you’ve even submitted an offer. Adjusting the inspection period—such as shortening it—can make your offer more attractive to the seller by speeding up the process. Some may appreciate you taking the lead to speed things up. But it could also hurt your offer if they are in urgent need to sell ASAP. An offer with a pre-inspection is less appealing when weighed up against others who are willing to proceed without an inspection. Additionally, offers with fewer contingencies are often preferred by sellers, as they present less risk of the deal falling through.
• Capped repair requests: A clause can be added with a pre-defined cash limit of the seller’s financial responsibility. This is usually around 1%. This puts some sellers at ease as minor issues, such as loose fittings, won’t hold up the sale as they’ll be covered. Sellers can relax a little as they know that unless big problems (such as subsidence or roof concerns) are found, they know what costs they need to cover. When dealing with a potential buyer who has contingencies, sellers may use a kick-out clause to retain flexibility and accept a better offer if one comes along, and buyers should understand what happens if a seller does not make agreed repairs before closing.

Step 4: Work With an Experienced Agent

Losing a bidding war can sting long after you’ve missed out on your dream home. To massively reduce the chance of this happening, work with an experienced real estate agent—choosing the right agent can significantly impact your success in a bidding war.

Real estate agents can provide valuable insights into local market conditions, which can inform your bidding strategy and help you make competitive offers.

Effective communication between your buyer’s agent and the seller’s agent is crucial, as a responsive and communicative agent can make your offer more appealing to sellers.

The listing agent and seller’s agent play key roles in managing offers, negotiations, and ensuring all parties are informed throughout the process. Additionally, working with a local lender can strengthen your offer, as sellers often prefer buyers who use familiar, community-based financial institutions.

It’s a delicate dance. Being too slow or coming across as inexperienced is likely to irritate sellers. Yet, being overly confident with money to burn might irritate sellers, too.

An experienced agent can help you with the strategy, preparations, communication and terms. Each one needs to be on point to give your offer the best chance of success.

How an experienced agent helps you win a bidding war:

Professionalism: Having a proven agent shows sellers that you are committed and will be easier to engage with. Immediately, you stand out among the other bidders without one.

Years of hands-on experience: You learn every time you buy and sell a property. And real estate agents have been through the process hundreds of times. So, agents have a better understanding of each step and how to manage them.

Escalation: Agents know how to strengthen your offer and manage it through the complications that arise from a bidding war.

Local expertise: FastExpert connects you with top real estate agents in your area. Unlike other platforms, you can’t buy your way up the list of FastExpert agents to appear at the top. Working with an agent who knows the neighborhood is better equipped to guide you through all steps of the process – especially the bidding war.

Are Escalation Clauses Smart or Risky?

Just like writing personal letters to sellers, escalation clauses have pros and cons. So, what is an escalation clause? An escalation clause is an agreement from the bidder to have their offer automatically increase by a set amount above competing bids, up to a maximum limit, if they are outbid. This means your offer can automatically increase in response to other competing bids, helping you stay competitive without needing to manually submit a higher bid each time. The terms are clearly defined:

• Trigger: The amount of money that starts your escalation trigger.
• Amount increase: The amount to increase your offer by when you’re outbid.
• Maximum price: The highest bid you are willing to pay.
• Escalation limits: Setting the terms. For example, only go above the written offers that are under the asking price.
• Buyer protection: Requiring proof of rival offers.

Example of an escalation clause:

• Trigger: $270,000.
• Amount increase: $3,000 above the highest offer.
• Maximum price: $285,000 (your highest bid).
• Escalation limits: Only apply to written offers. Offer does not apply to offers that include seller-paid closing costs exceeding $5,000.
• Buyer protection: Sellers must provide written proof of all competing offers. The offer will expire in 10 days if not accepted.

The pros of escalation clauses:

• It shows the sellers that you are a serious buyer and could help you from being outbid before the bidding war starts.
• Fewer emails/phone calls to deal with.
• Avoid overpaying.

The cons of escalation clauses:

• There’s a chance of paying above the asking price.
• It can cause financing issues with your lender.
• For extremely fierce bidding wars, an escalation clause may cost you some negotiating power, as they already know your maximum bid.

When to use an escalation clause and when not to?

Sometimes, sellers state that they’re seeking the highest and best offer on the table. If so, this is a clear opportunity for an escalation clause. Some states also don’t allow escalation clauses, so check your local regulations first.

How to Balance Emotional and Financial Decisions

The drama of bidding wars can lead to emotions clouding your perspective. Proper preparation and strategic planning can make all the difference in achieving a successful outcome. It’s important to remember that this is bigger than winning a bidding war; think long-term to avoid buyer’s remorse. Decide on what you can afford and then create a max offer to stop emotions from leading you into overcommitting.

What Do Sellers Look for in Bidders?

It’s easy to get laser-focused on money when you find yourself in a bidding war. While money is a huge factor, the highest offer isn’t always the best deal for sellers. Price isn’t the only thing that sellers look at when assessing offers on the table. Every seller is in a different position.

The factors that sellers consider when making a decision:

Financial Factors

• Price – the obvious one. Is your offer decent or does it leave sellers thinking that they can find a higher offer? Understanding the market value of the home is important when determining your offer price.
• Payment method: Cash or financing? A cash offer is often more attractive to sellers because it eliminates financing contingencies, making the transaction smoother and more reliable. Financing can come with delays and complications.
• Loan type: If the seller is financing this deal, what type of loan is it? FHA, VA, and conventional loans have different requirements that need to be considered.
• Escalation clauses: Reading each escalation clause gives sellers a better idea of what to expect if multiple offers come in.
• Earnest money deposit: The amount of earnest money put down gives sellers an idea of the bidder’s commitment level. A larger deposit demonstrates financial strength.
• Down payment: The size of the down payment is significant in strengthening an offer, as a substantial down payment can help avoid appraisal gaps and shows the buyer’s financial stability.

Flexibility Factors

• Timelines: Sellers may need to relocate ASAP. The timeline can be a major factor.
• Pre-approval: Sellers often request pre-approval letters from interested buyers to ensure financial strength and confirm that the bidder has the finances to buy their property.
• Contingency assessments: Every contingency is a possible reason to exit the deal. Each one will be assessed, and sellers prefer offers with fewer contingencies because they reduce the risk of the deal falling through.
• Buyer’s situation: Does the seller have a chain? Are they chain-free? A first-time buyer? Are they a traditional homeowner or planning to sell their home to an investor, which might change how quickly they need to close and how they evaluate offers?
• Reason for buying: Is the buyer booking to buy their first family home? Or are they a career landlord? Some sellers might not care, but it can be a factor, just as what you choose to share when selling—and what you should not tell your realtor—can shape negotiations from the other side of the table.
• Professionalism: Is the seller carrying themselves in a professional, respectful way? Or are they showing some red flags in their communication that could turn into problems later?

How FastExpert Agents Can Give Buyers the Edge

Bidding wars can be stressful and take many twists and turns, especially in today’s competitive real estate market and fast-moving housing market. Working with a proven real estate agent can increase your chances of winning a bidding war.

According to the National Association of Realtors, understanding current housing market trends and having expert guidance are key to success in multiple-offer situations.

Access 85,000+ top agents across the US using proven strategies to help you strengthen your offer and walk through each step with less stress, more confidence. Find an expert today.