Increase your chances of getting your dream house in a competitive housing market, and lower your chances of losing out to another buyer. Is this information necessary in this day in time? I think so, at least in our market. I have seen Buyer Clients miss out on several homes lately due to multiple offers on properties they found that they liked. Especially on distressed sales, investors are out in droves. In our market in the Greater Athens Georgia area we are seeing companies from as far away as California that are controlling our distressed sales and driving prices up to “market” levels.
1. Get qualified for a mortgage. You’ll be able to make a firm commitment to buy and your offer will be more desirable to the seller. You will note I did not say “pre” qualified. Pre-qualification is out. No a days most Buyers and their Agents want to see a qualified buyer. This means going the extra steps to get an approval from an underwriter.
2. Stay in close contact with your real estate agent to find out about the newest listings. Be ready to see a house as soon as it goes on the market — if it’s a great home, it will go fast. This is great information if you live in a smaller market. I know first hand in our market that in most price points there are a limited number of homes for sale. Don’t be fooled by the national media that screams of high inventory levels. This may be the case nationally, but unless you live in a large metro area your town may or may not be overrun with homes to pick from and you might start seeing more of a competitive market as rates are at historic lows and Buyers start jumping off the fence and into the buying pool again.
3. Scout out new listings yourself. Look at Web sites such as MLS Finder, browse your Zillow.com, and Trulia.com, and drive through the neighborhood to spot For Sale signs. If you see a home you like, write down the address and the name of the listing agent. Your real estate agent will schedule a showing.
4. Be ready to make a decision. Spend a lot of time in advance deciding what you must have in a home so you won’t be unsure when you have the chance to make an offer.
5. Bid competitively to protect You. This point will go with my point on #7 (below). You want to be competitive with the market, but you don’t want to pay more than you have to pay for a new home. From experience it seems that an offer of 80%-90% of list price can be reasonable on a home that has been on the market for more than 200 days. If you are considering a home that has not been on the market quite so long, a Seller may be less apt to take or consider an offer at this level and may hold out for a better offer. If you see a home like this which is relatively new on the market that you want to make an offer on I would still not offer more than 90% of list price and negotiate from that point.
All of this advice depends on sales in the market and comparables. What I mean by this is that in any given neighborhood you will have recently sales that might be far less than actual inventory for sale. For example, in Bogart Georgia, righ outside of Athens, I know of a neighborhood where much of the current inventory has been on the market for more than a year. One of the homes in this subdivision has been on the market for “only” 150 days, but they are priced $40k higher than the last sale. You have to know what has sold recently and not just what is “for sale.” In this case, even if I had a Buyer who was in love with this listing, I would encourage them not to offer more than about 80% of list price, because I think list is too high.
6. Keep contingencies to a minimum. Restrictions such as needing to sell your home before you move or wanting to delay the closing until a certain date can make your offer unappealing. In a tight market, you’ll probably be able to sell your house rapidly. Or talk to your lender about getting a bridge loan to cover both mortgages for a short period. This is great advice for buying properties that are distressed such as short sales and foreclosures.
7. Don’t get caught in a buying frenzy. Just because there’s competition doesn’t mean you should just buy it. And even though you want to make your offer attractive, don’t neglect inspections that help ensure that your house is sound. Again, to be redundant, this is great information for buying properties such as short sales and foreclosures. I have seen “great deals” which were not so great when you went by the foreclosure property for re-sale on a rainy day and saw inches of water in the basement that the corporate owner was selling “as-is.”
