How to Win a House Bidding War

A bidding war occurs when multiple buyers compete for the same property by incrementally making a more attractive offer than the previous buyer. This process usually drives the sale prices higher than the initial list price. 

Bidding wars are common when housing supply is low and buyer demand is high — often referred to as a seller’s market. Bidding wars can be great for sellers who want to make a higher profit on the sale of their house or get a cash offer. For buyers, a bidding war may mean paying over asking price or waiving contingencies to win the home.  

We’ll cover each stage of the process, from bidding on a house to accepting bids, and share tips on how to win a bidding war.

How does a bidding war work? 

1. Multiple home buyers submit their offers on the same property.
2. Homebuyers learn of competing bids and counterbid by increasing their offer, driving the sale price higher.
3. While the highest bid often wins, sellers may also consider other factors, like cash offers or waived contingencies.
4. Bidding wars create significant advantages for sellers, often leading to a final sale price above the house listing price.

How to bid on a house 

Bidding on a house means making an offer. If you’re working with a real estate agent, they’ll be able to help you craft an offer letter that includes contingencies and a fair earnest money deposit. Here is a closer look at the bidding process: 

1. Evaluate your budget

Assess your finances to ensure you can afford to buy a house. You’ll need funds to cover closing costs, a down payment, and moving expenses — which may be between 2% and 25% of the home’s purchase price.

If you’re financing the purchase, consider whether the amount you're borrowing will fit comfortably within your monthly budget. A mortgage payment less than 30% of your monthly income is ideal, but every borrower’s financial situation is unique. Consider getting pre-approved for a mortgage to see how much you qualify to borrow. Once pre-approved, you'll receive a pre-approval letter, which can be included with your offer to strength your credibility as a buyer with sellers.

2. Find the right home

You can search for homes online using tools like Zillow. Start by looking at nearby neighborhoods or cities of interest, and use filters to narrow down your search. Attending open houses can be a great way to learn what you like and dislike in a home. 

3. Research comparable sales

Ask your agent to run a Comparative Market Analysis (CMA) to determine if the listing price aligns with market trends and comparable home sales. Comparable properties (called “comps” for short) are recently sold homes in the area that are similar in size, condition, and location. Comps can be used to determine a fair offer price when placing a bid on a house. 

4. Craft a competitive offer

A strong offer is based on market research. Use comps and market trends to craft an offer letter that is competitive based on the market you’re in. In competitive markets, your offer is likely to be higher than the asking price or may include fewer contingencies. When there is less competition, you may be able to offer a lower price than what’s marketed. Working with a real estate agent that understands your local market is key to crafting a winning offer letter. Zillow’s partner agents are here to help. Together, you can decide on an offer price that fits your budget and assess what’s needed to make your offer stand out. 

5. Add earnest money

Earnest money is a good faith payment you include in your offer letter to convey your commitment to buy and count towards your down payment if using financing. Typically, earnest money deposits are between 1–3% of the home price. In hot markets, a higher deposit may be advised by your agent to stay competitive. 

6. Submit your offer

Once you’ve crafted your offer letter, ask your agent to share the offer with the seller or their listing agent. In competitive markets, homes tend to go under contract quickly. You may need to submit your offer the same day you find or tour the home. Being first to bid may impress the seller and give you the extra leverage you need to seal the deal.  

How to start a bidding war 

If you’re selling your home, a bidding war can maximize your profit. And there are effective strategies sellers can implement to increase the chance of a bidding war. Here’s how to set the stage for multiple offers. 

1. Partner with the right agent

Choose an experienced real estate agent skilled in creating buzz around listings and navigating competitive markets. A Zillow partner agent can help you own the selling process from start to finish.  

2. Strategically price your home

Setting the initial asking price slightly lower than the market value may attract interest and encourage multiple offers, especially if homes for sale nearby are priced much higher. Learn more about how to price your home to sell. 

3. Invest in home improvements

First impressions matter. And boosting curb appeal can make a big difference. Showcase a move-in-ready property with professional photography, staging, and improvements. Most sellers (72%) said in a 2024 Zillow survey they completed at least one improvement project as part of selling their home. Among those that made any improvements, the most common improvement was painting the interior of the home (46%), followed by bathroom (42%) and kitchen (38%) improvements.

4. Plan a high-impact open house

Create anticipation by actively marketing the home before showings and scheduling an engaging open house event. While the desire for virtual home tours and digital floor plans remains high, 80% of the buyers surveyed in 2024 agree that the only way to really understand the layout of a home is to see it in person. 

To drum up buzz about your property, start marketing the listing on social media before the open house, and hold off on allowing showings until the day of the event. 

5. Establish an offer deadline

Encourage fast action by setting a specific date and time for buyers to submit their bids. The median seller receives two offers — a consistent annual trend since 2018. If you’re like most sellers (47%) who describe their selling timeline as “medium” — some urgency, but not rushed — you have time to wait for the best offer if one deadline doesn’t yield the offers you’re expecting.

6. Ask for a pre-approval letter

Half of sellers in a 2024 Zillow survey reported at least one offer fell through, and the most common reason was an issue with money, mortgage, or financing (40%). To avoid delays or failed offers, request pre-approval letters from interested buyers before engaging in negotiations. A pre-approval letter indicates the buyer is conditionally approved for a mortgage, as long as certain conditions are met, meaning their offer is less likely to fall through due to financing. 

How to win a bidding war for a house 

Whether you’re buying or selling, understanding effective strategies can tilt the odds in your favor during a house bidding war. 

Winning strategies for buyers 

• Secure pre-approval: Mortgage pre-approval signals you’re serious about purchasing the property and ensures you can act quickly. 
• Make a competitive and clean offer: Go beyond offering the highest price. A clean offer with fewer contingencies, such as waiving a home inspection, can often be more appealing to sellers. 
• Show your commitment early: In competitive markets, submitting your offer before the seller’s review date can demonstrate you’re a well-qualified buyer who’s ready to move forward, potentially helping your offer stand out.
• Act quickly with an escalation clause: Add an escalation clause in your bid to automatically outbid competing offers up to a specified limit. 
• Offer more earnest money or cash: Demonstrating financial strength with a higher deposit or an all-cash offer can give sellers confidence in your bid. 

Winning strategies for sellers 

• Prioritize cash offers: Cash deals often close faster and have fewer contingencies, minimizing the risk of delays or deal cancellations. 
• Consider the financial strength of offers: Review offers for appraisals, financing contingencies, and proof of funds to gauge buyer reliability. 
• Look for financial readiness: Pay attention to pre-approved homebuyers, who are less likely to have their offer fall through because of financing. 
• Know your home’s true value: If bids exceed the expected value of your property, check whether buyers have the financial backing to cover the difference if the appraisal falls short. 

Bonus tip

Markets vary greatly across the country. Use Zillow’s Market Data to gauge whether your area leans toward a buyer’s or seller’s market. 

Taking the next step 

Bidding wars are a testament to the competitive nature of real estate, but with a well-crafted strategy, you can stay ahead. Whether you’re a buyer ready to submit an offer, or a seller seeking maximum value, preparation and a trusted partner make all the difference.