Currently there are at least 40% fewer homes on the market now than there were a year ago. Many serious buyers have lost a property they wanted because of the increased competition. Today’s buyers should be looking for ways to improve the odds that their contract will win without needing to use purchase price as their only tool.
Buyers should reconsider, rethink, and re-evaluate their “must have” features and amenities. It’s unrealistic in a normal market to get your perfect home at the price you want. But in today’s market, it is even less possible. Start by listing the things you must have, and the things you would like to have, then prioritize them. Identify the critical from the convenient.
The next step is to put together your “home” team. You are the captain of this process, but it is essential to have a strong first officer and that is your real estate agent. This professional will oversee the process, advise you on current market conditions and normal procedures. Your agent will even help you assemble the rest of the assets you will need such as a mortgage officer, title, insurance, warranty, inspectors and service providers.
Your agent can advocate your cause personally to the listing agent by personally delivering the offer and pointing out your strengths to lobby your position. Obviously, your agent will not share anything that you do not expressly give them permission to.
Even before you write your offer, your agent can ask the listing agent about any preferences of the seller not mentioned in the listing agreement, as well as which contract forms and addendums to use.
The following list of suggestions are provided for your consideration realizing that some may not be appropriate for your individual financial situation or comfort level.
- Get pre-approved from a local lender and include documentation with offer to purchase.
- Have your lender phone and email the listing agent to verify that you are pre-approved.
- Increase the amount of earnest money.
- Acknowledge flexibility on closing and occupancy dates.
- Eliminate unnecessary contingencies.
- Waive the appraisal and have proof of funds to meet the difference in the purchase price.
- Avoid concessions like asking the seller to pay the buyer’s closing costs or points.
- Avoid including personal property to go with the sale unless specified in the listing agreement.
- Purchase “as is” with right of quick inspection to cancel contract if condition is unacceptable.
- Shorten time frames on necessary contingencies.
- Attach proof of funds for down payment or full purchase price if cash.
- Arrange bridge financing to be able to pay cash.
- Buyer should pay their own normal closing costs.
- Write a personal note to the seller explaining why you like and want their home. Some listing agents are advising sellers to not accept them due to potential discrimination liability.
- Escalation clause … offer to pay $X,000 more than highest acceptable offer up to a limit.
- If you physically sign the offer, use a contrasting color ink to add a personal touch. If using a digital contract, change the font and color to distinguish the signature.
- Make your best offer first because they may not make a counteroffer.
When a new listing hits the market, it is common for there to be a rush of interested buyers that result in multiple offers. Because of this, it’s prudent for you to research and consider which of these ideas you can implement before you find the home. It is much better to have more time to make these decisions, especially, if it involves a mortgage officer or an attorney.
Your real estate professional will be able to tell you which of these suggestions are viable and may be able to offer additional recommendations. If you do not have an agent, contact me at 510.244.0081 or rdwilson@soundnvest.com to discuss a plan to craft your offer in the most favorable way possible.