For the past several years, it has mostly been a sellers’ market. The inventory of homes is far less then the number of willing and able buyers out there. This has created a situation where there are multiple offers on each property, which creates ‘bidding wars’ and offers where the buyers often remove contingencies, just to get the house. For sellers, this is great, for buyers, it is very scary and frustrating. Here are a few tips for buyers, on how to get the house.
Know what you can and can’t do!
Well-priced homes, that have been updated, well maintained and have had a ‘prior’ home inspection before hitting the market, usually sell instantly, sometimes within hours of being listed. Most often, the listing agent will inform the other agents in his/her office about a new listing in advance, so they can get their buyers through first. This is an in-house sale which happens quite often in a sellers market. Unfortunately there is very little you can do it this type of situation.
What you can be prepared for in advance, is have all your financial, pre-approval and necessary funds available, to be able to make the strongest offer when a home pops up you want to make and offer on. Note, a pre-qualification where you call a lender(s) and discuss what you would qualify for is not the same as getting a pre-approval where you actually provide the lender with all your documentation, to prove you are qualified for a certain loan amount.
Additionally, once you have decided to get a pre-approval, don’t make ANY additional purchases, that are not absolutely necessary. For example, you get in an accident and need a new car, tell your lender right away. If you have enough extra cash, fine, but you may have to lease a car instead. There are actually many ways to get your mortgage pre-approval revoked so be very careful once you have started the process of buying a home.
Dealing with multiple offers
If you run into the situation of multiple buyers making offers, a seller will choose the best buyer right out of the gate. How can they tell who that is? The best buyer is the one who is most experienced in the market, often times they have lost a house or two, they will be working with a local agent, they have their loan lined up, and they make the most aggressive offer, soon after after the home is listed. Many times they are the first buyers through the door.
If you find yourself in this position, be prepared in advance. More than likely, your agent will know if there are other offers on the house – be sure to have them ask. If you find that there are, be ready to go in at full price and higher if you are able. Also, write a letter to the sellers. Tell them how much you love their home, how you would cherish it as they did and use specific examples about what you love about it. If you have younger children, a letter from them with a picture they draw of the house and your family in front of it works amazingly!
Buyers need to plan ahead
Do you know what the sellers are moving? Most of the time your agent can find out, but often, this is not the case. There are literally dozens of reasons a home may be on the market; a new job, death in the family, divorce, downsizing when the kids are all gone and the list goes on. So, after your agent gets as much information as possible to help you make your very best offer, the price may not be the most important factor to the seller. They may need time to find a new house themselves, especially if they haven’t already found one. You may never know what the sellers motivation to sell is, just remember, price may not be the most important part of negotiating on the house you are looking at.
Don’t wait around
You know the expression, ‘The early bird catches the worm’, this approach is a must in a sellers market. When a house hits the market, you should go see it instantly. If you don’t, there will be someone else who will and then it may be gone. Many buyers think, I will wait for an open house which they are having this weekend. Don’t make this mistake.
Make a good first impression and a strong offer
The first buyer is nearly always the best buyer. By moving quickly, these buyers show sellers they mean business. If you want to submit an offer, make your contingencies and time frames short, to take as much risk as possible off the table for the seller. If you need to inspect the property and have an appraisal, get those done within days of getting into contract, not weeks. If you are aggressive, ask if they had the home inspected prior to listing. If so, ask if you can see the report, so you may be able to waive the inspection. Inspections pose the biggest risk or uncertainty in the eyes of the seller. If your offer is not contingent on the inspection, you will have removed one of the largest contingencies. If you plan on trying this, make sure you check out the inspection company thoroughly, on line, with the Better Business Bureau and any other resource you can find on them. Only in cases with multiple offers, and the opportunity to see a fully detailed report will you want to consider this.
Wendy Weir Relocation – Real Estate Agent, Relocation Specialist, Birmingham, MI
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