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Credit Expert Breaks Five Homebuying Rules to Win a Bidding War

Credit expert Beverly Harzog broke five homebuying rules to win a bidding war with 28 other offers. See her strategy and advice for others.

August 25, 2021
August 25, 2021
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Sometimes to stand out in a crowded housing market you have to break a few homebuying rules.

Beverly and Bernd Harzog nearly broke them all to win a bidding war on a house with 28 other offers.

The Harzogs weren’t officially on the hunt for a new home. In fact, they planned on waiting a year or more before downsizing. However, after wandering into an open house in Alpharetta, Georgia, they fell in love with the home and location, and moved quickly to submit an offer.

Within 36 hours of seeing the house, their offer was accepted.

While unorthodox in many ways, their homebuying journey showcases some of the ways buyers can stand out in today’s hypercompetitive market -- even if it means coloring outside the lines.

Beverly is a credit card expert and consumer finance analyst for U.S. News & World Report. She used her professional expertise in personal finance to guide her strategy. What worked for her situation may not work for all homebuyers and housing markets. Still, her story is worth a look by other homebuyers who are struggling to get an accepted offer.

Five broken homebuying rules

Like in many housing markets, low inventory and high demand is pushing competition and home prices up in Alpharetta. According to, the median home list price increased from $499,000 to $527,000 in the last eight months.

This spring, the median sold price surpassed the median list price. Homes were selling for 3.01% above asking price on average in July.

This competitive environment makes it difficult for any buyer, so how did the Harzogs swoop in at the last minute to win their bid?

Beverly said their strategy involved breaking five conventional homebuying rules.

Related: 15 Homebuying Myths Your Parents Told You Debunked

Broken Rule 1: Use a real estate agent

Given that the Harzogs weren’t officially “looking” for a house, they did not have a buyer’s agent for their transaction. This generally is not recommended, especially for first-time homebuyers, but Beverly was able to lean on her professional experience with credit and personal finance to build their offer.

Operating without a buyer’s agent also allowed Beverly to communicate directly with the seller’s agent to add personal touch to their offer.

“We just conveyed to the seller’s agent how much we loved the house.” Beverly said. “We also told them that we understand they already bought another house, so we are willing to rush the closing to make it happen.”

Broken Rule 2: Decide how much you can afford and stick to it

The Harzog’s broke this important rule in a unique way. They set a budget for how much they were willing to spend, and then put aside $100,000 for the bidding war itself.

“You have to know your search area -- it wasn’t uncommon for houses to go for a hundred thousand over asking,” Beverly said.

Expecting a bidding war, the Harzogs had a special savings account just for the homebuying process. And instead of looking at houses with a list price at the top of their budget, they (unofficially) looked for houses listed well under their budget but would likely end up selling near the top of it.

“People think they can afford a $450,000 house, so they look at $450,000 houses,” Beverly said. “But those end up selling for well over $500,000. And you might have to give up some things to afford that price range.”

Broken Rule 3: Get pre-approved for a mortgage before searching

Given the Harzogs wandered into their dream home on a whim, they didn’t break this rule intentionally. In today’s competitive housing market, most sellers won’t even consider an offer without pre-approval documentation.

This was the case for the Harzogs. After touring the house for an hour and a half, they told the seller’s agent they were very interested, but were not pre-approved. The agent referred them to a lender that could do pre-approval over the weekend so they could submit an offer in time.

“We moved as quickly as possible to get the preapproval letter because we couldn't make an offer without it,” Beverly said. “One of the points here is if you don’t have [a pre-approval letter], you should still see if you can get it.”

The Harzogs were able to expedite the pre-approval process by having excellent credit scores and keeping their financial documents organized and easily accessible.

“It would have been silly to blow the whole process over something like not being able to find a document,” Beverly said.

Broken Rule 4: Put down 5% in earnest money

Knowing they were up against 28 other offers, the Harzogs knew they had to make theirs stand out. Putting down more earnest money was one way to show the sellers they were serious.

Also known as a good faith deposit, earnest money is put down before closing. If the buyers back out, the money goes to the sellers to recoup the cost of taking the home off the market and relisting it. If the transaction goes through, it goes toward the buyer’s down payment or closing costs.

The customary amount for earnest money depends on the market. In Alpharetta, 5% of the list price is considered standard. In other markets, 1%-3% is standard.

Since they had $100,000 set aside for a bidding war, the Harzogs were able to offer 10% of the list price.

While Beverly recommends this strategy, she realizes it’s not an option for all homebuyers.

“Take some time to save up,” she said. “Get a side hustle and keep that income to put into a home. We didn’t just wake up and say, ‘We’ve got all this money, let’s go for it.’ We had a special account just for the homebuying process.”

Broken Rule 5: Waive contingencies, such as inspection

There are several ways to make an offer more attractive to sellers, some of which come with risks to buyers.

In today’s competitive market, waiving inspection is becoming more common despite being risky. A buyer could win a bidding war by waiving inspection, only to pay thousands of dollars in home repairs.

The Harzogs took a different route. Instead of waiving inspection, they included an escalation clause in their offer. Basically, they gave the seller’s $1,000 for the right to top the final offer.

“The escalation clause was certainly in our favor, but it carried some risk,” Beverly said. “If the appraisal comes in low, you have to come up with that cash because the lender will only give you the appraisal amount.”

The Harzog’s were able to mitigate this risk by setting aside a substantial pool of cash specifically for the bidding war and homebuying purposes.

Lead with your best foot

With excellent credit and hefty cash reserve, the Harzogs were in great shape heading into the bidding war. Even still, they had to be strategic in their approach to a bidding war.

For Beverly, that meant leaning on her 813 FICO credit score. This not only helped them get a fast pre-approval, it assured the sellers they could back up their escalation clause as the bidding got higher.

“It’s about providing as much assurance to the sellers as you can,” she said. “If you are in possession of a great credit score, go ahead and mention that to the agent -- use it as leverage.”

The Harzogs don’t know exactly which tactic put their offer over the top, but assume it was a combination of all the little things they did.

“Sometimes you have to break a few rules,” Beverly said. “A lot of times the answer will be no, but sometimes it will be yes.”

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