Unless you have been under a rock for the past two years, you can’t help but know that we have experienced one of the greatest seller’s markets in history. A major shortage of inventory and abundance of buyers has caused the real estate market to go bananas! Since I have received many recent reader inquiries about this subject, this month’s column offers a few suggestions that may put you in good buying position.
YOUR PRICE OFFER
Historically, American buyers have become accustom to negotiating and paying less than the list price for large ticket items like houses and cars. But, think about it, when was the last time you went into a retail store and asked to pay less than the amount that is on the price tag? How about walking into McDonalds and asking to pay less for the Big Mac? If you want it, you buy it, and that is what is happening in our current seller’s market. Not only are today’s buyers paying list price, but in many cases, they are paying well over list. In addition to paying top dollar for your next home, you should also be prepared to offer other terms that will help you stand out if you find yourself competing for the perfect home. Multiple offers are definitely more common than not. Below are a few terms that buyers are offering to compete and secure the deal.
FLEXIBLE CLOSING DATE
If possible, allow the seller to choose a closing date. Willing to be flexible can certainly put you out in front of the pack if you find yourself in a multiple offer situation.
AS MUCH EARNEST MONEY AS POSSIBLE
Not to be confused with downpayment, earnest money is your initial deposit to show the seller that you are “earnest” or serious about your intent to purchase. Keep in mind that this deposit is applied toward your downpayment and closing costs and refundable if/when you have met your obligations and exercised any contingencies that are in the sales agreement.
Cash will always be KING and especially so when you are competing. I have had several clients who received multiple offers (up to 11 in one case!). With the higher sales prices lately, appraising out at full offered price might be a concern for a seller. So, the client placed great value on the one cash offer out of the eleven, even though it wasn’t quite the highest and that cash offer won the day. (Appraisals are only required if obtaining a mortgage, cash purchase does not require an appraisal.) Not everyone can manage cash, but creatively if you can get access to even temporary funds to swing a cash offer, then immediately after closing you can obtain a mortgage to replace the funds used. Savings, relatives, retirement accounts, etc., all are options for temporary funds.
‘AS IS’ CONDITION
As scary as this may seem, there are two ways to do this using the current sales agreement and they are both being done in this most competitive market. One “as-is” with waiving a home inspection entirely, and the other “as-is” but still having the typical home inspection for your own information, to make sure there are no insurmountable issues. (If issues are found that you determine to be too great, you would be able to cancel the contract within your inspection contingency period.)
ADVICE: Now is the time to think outside the box if you want to win in today’s crazy market. Use the services of an experienced Realtor®. We know what the market requires and we will take you to the finish line!