Have you been writing offers on homes with no success? Competing against multiple offers is an issue for today’s homebuyers. I’m bringing my 25 years experience as a real estate professional to provide these 3 insider strategies to get your next offer accepted!
🏡Today’s real estate Market. The real estate market is in transition and although home prices are not skyrocketing as in the past, we are still experiencing home appreciation. NAR estimates the national appreciation rate for 2024 will be just shy of 3%.
So, why are homebuyers still competing with other buyers to get their offer accepted? Depending on specific regions, many times homebuyers are competing with 10-15-40+ other offers. What gives? In a word, inventory. Meanwhile, interest rates are at a 20 year high and sellers don’t want to list their home therefore giving up their low interest rate.
💥Strategy #1: You need a realtor!
Work with a Full Time Professional Realtor. Many buyers think they are saving money by contacting the listing agent on a property. The listing agent is representing the seller NOT the buyer, even if the same agent writes the purchase agreement.
As a buyer, you need to be represented and protected when writing a legal contract…aka a purchase agreement. The seller pays the realtor commissions so on a purchase transaction, you need to have your own agent!
When selecting a realtor, you need a respected, industry professional who is serious about real estate. Not your Uncle’s, best friends, nephew who dabbles in real estate on the side. As new listings hit the market, you want someone who is tuned in and actively networking with other agents. An agent engaged with the real estate community is more likely to provide an off market listing opportunity. In this case, its who you know!
💥Strategy #2: Secure your Pre-Approval NOW!
Timing is everything. Especially when the home of your dreams has popped up on the market suddenly and offers are due at noon.
Without a preapproval letter, you have no credibility or strength when writing an offer. As a result, you will either lose out on the opportunity to write an offer and/or you will be scrambling to get a letter in a jiffy. You may get lucky however it is best to obtain your pre-approval prior to shopping for a home.
When dealing with what could be the largest investment of your lifetime, it makes sense to be more strategic here. Mortgages are not one size fits all. Do your homework and get your finances taken care of in advance.
💥Strategy #3: Be Prepared to write a strong offer!
The next insider strategy for homebuyers requires that you are using the first 2 strategies. An experienced realtor will educate you suggest what it will take to win the bid. You will need to write over the list price. It is what it is. Just think about the folks who purchased homes over the past few years for $50k+ over list price. Certainly, that was a good decision as appreciation has more than made up for it.
A few additional ways to write a strong offer include Appraisal gap coverage, escalation clause, home inspection waiver and Cash. These are not uncommon in todays market.
Appraisal gap coverage gives the seller peace of mind, that if the appraisal does not meet or exceed the purchase price, the buyer will still proceed with the contract as written.
An escalation clause will set a max purchase price (sometimes unlimited). This will give the seller the highest purchase price from all the offers received.
Home inspection waivers are quite common as well. Many homeowners will arrange for a quickie home inspector during the “showing” period. This will at least give the buyer a bit of confidence for the major components like roof, plumbing and electrical. Otherwise, once the contract is signed, the buyer is unable to cancel due to property inspections.
Cash offers are tough if not impossible to compete against. Therefore, talk to your lender about ways to be a cash buyer yourself. Perhaps you have money tied up in your current home or access to cash from a family member. There are ways to pay yourself back after the transaction, by refinancing a mortgage on the property after you own it.
What are your thoughts and experiences?
Comment below.