What Is a Bidding War?
Imagine the breathtaking Spanish Colonial Revival-style home pictured above has just hit the market. This legacy property is everything you’ve been looking for, so you make an offer—but so does another eager buyer. A bidding war begins.
“In Santa Barbara and the surrounding areas, limited inventory and strong demand mean bidding wars,” says veteran luxury realtor Cristal Clarke, “especially for properties in prime locations.”
In a bidding war, sellers hold the power. They may ask for ‘highest and best’ offers or choose the one that gives them the most confidence—whether it’s the highest price, the quickest closing, or the cleanest terms. So, how can a buyer stand out from the competition?"
Here are Cristal Clarke’s 5 expert tips for winning a bidding war:
1. Consider an All-Cash Offer
If you can make an all-cash offer, you instantly become a more attractive buyer. Cash deals mean no lender delays, no appraisals, and a quick, low-risk close for the seller.
How an all-cash deal works:
- Provide proof of funds with your offer.
- Skip the mortgage approval and appraisal process.
- Close in as little as 7–10 days.
Can’t offer all cash? A strong earnest money deposit (EMD) can still enhance your appeal. This good faith offer—typically 1–3% of the purchase price and held in escrow—demonstrates to the seller that you’re committed.
If neither of those options works, the buyer should secure a mortgage preapproval letter confirming that they have been thoroughly evaluated and approved. This signals to sellers that they are a serious, financially qualified buyer—ready to act quickly. In a multiple-offer situation, sellers are much more likely to choose a preapproved buyer over one who has not taken this crucial step.
2. Make a Competitive Offer—Not Just the Highest
It might seem like the highest offer always wins, but that’s not necessarily true.
“Sellers often prefer the strongest overall offer with the right mix of price, terms, timing, and reliability,” says Cristal.
She suggests you ask your agent to find out what matters most to the seller and tailor your offer accordingly.
A competitive offer includes:
- Preapproval or proof of funds
- A solid purchase price based on comps
- Fewer contingencies
- A short or flexible escrow period
- Clear intent to close
.jpeg)
3. Limit Contingencies—But Know the Risks
Contingencies are clauses that allow you to back out of a deal under certain conditions. In a bidding war, minimizing them makes your offer stronger.
"Limiting contingencies has its pros and cons,” Cristal says. “On the plus side, your offer stands out, and sellers see you as committed and easy to work with. However, it also comes with greater financial risk and the potential for surprises after closing."
Key contingencies to consider waiving:
- Appraisal Contingency: If the home doesn’t appraise for the offer price, you’ll need to cover the difference in cash if you’ve waived this. Only do this if you’re confident in your finances and the property’s value.
- Home Inspection: Waiving the inspection contingency can make your offer more appealing to sellers, but it comes with significant risk. If you choose this route, be sure to conduct a thorough walk-through with a trusted contractor or inspector before submitting your offer. Some sellers may also provide a pre-listing inspection, which should be reviewed carefully to help you make an informed decision.
Cristal recommends buyers work with their agents to weigh these trade-offs carefully.
4. Keep Communication Open and Friendly
Sometimes, the “nicest” offer wins—not because it’s the best on paper, but because it’s easy and drama-free.
“A good buyer’s agent does more than just write offers,” Cristal says. “They build rapport—something sellers and their agents notice. Communicative, professional, and flexible buyers stand out.”
What this looks like:
- Your agent calls the listing agent before writing your offer to ask what the seller wants.
- You’re available to sign documents quickly.
- You respond promptly to counteroffers or questions.
.jpg)
5. Didn’t get the house? Don’t walk away yet.
So, you didn’t win the bidding war—but you can’t stop thinking about that stunning Spanish Colonial with its red-tiled roof, rich with local history and stunning ocean view. Don’t lose hope. You can still submit a backup offer, which the seller may accept as a second-in-line option if the initial deal falls through. And it happens more often than you might think—especially when the winning offer is contingent on multiple conditions.
“Alternatively, you can use a kick-out clause in your offer,” she explains. “This allows the seller to accept your offer while still marketing the home. If they receive a better offer, you get the chance to remove contingencies and proceed—or walk away.”
Cristal’s Final Tips
- Act fast: Time kills deals. If you love a house, be ready to write immediately.
- Know your ceiling: Don’t get swept up in emotional overbidding. Have a firm budget and stick to it.
- Work with a respected agent: In tight-knit markets like Montecito, relationships matter. A trusted agent can give you insider knowledge and help your offer stand out.
- Offer rent-back if needed: Give the seller time to move out after closing—especially helpful if they’re buying elsewhere.
- Let your offer expire quickly: This creates urgency and reduces the chance of other offers entering the mix.
Ready to find your dream home in any of the upscale communities in and around Santa Barbara? With the right strategy and a seasoned real estate expert, you can emerge victorious in even the most competitive bidding wars. Visit Cristal’s comprehensive website to explore her current listings and real estate opportunities in the MLS. Then, contact her at (805) 886-9378 or Cristal@montecito-estate.com. She’s prepared to help you craft an offer that stands out and achieves the best results for you and your family.
Of Related Interest: