Our Triad real estate market is heating up. Houses are selling and prices are slowly rising. It's definitely a great time to buy, and in this improving market, some adjustment in your home buyer thinking may be in order. Today, the best listings move quickly and, at times command multiple offers. If you find yourself competing with other home buyers for your dream home there are some strategies you may employ to improve your chances of success.
1. Be Pre-APPROVED for a mortgage. That does not mean pre-qualified. Pre-qualification simply means you've spoken to a lender and based on what you told that person, he or she thinks you'd probably qualify. Probably. Based on what you told that person. To a home seller weighing one offer against another, that kind of qualification is meaningless.
To be Pre-Approved, you must actually complete a mortgage application and it must at least make it through automated underwriting. A Pre-Approval letter strongly states that you are ABLE to make the purchase you are attempting. It can put your offer at the top of the stack with a seller who wants a smooth transaction.
Has your lender said, "no pre-approval without a contract?" If so, speak to ours. Our LoanFIrst™ product is exactly what you need.
2. Don't Dawdle. This is not a market to think, hem and haw about a home. Many home buyers actually lose out on one or even two homes before they understand the importance of moving quickly when the right home comes along. What does it take to move quickly? First, it takes getting crystal clear about what you want in a home. Which neighborhoods are acceptable? What style(s) are right for you? How big, how many bedrooms, what amenities and on and on. I would urge you to go through a wants-and-needs discussion with your agent. Having an knowledgeable outsider ask questions can help you become clear about what you want.
3. Make a Large Earnest Money Deposit. If this is the home you want, show that to the seller by putting a sizeable deposit on it. What is 'sizeable?' There is no rule of thumb, but your deposit is telling the seller, who may be weighing other offers, that you are serious. If you were a home seller, evaluating two very similar offers, one with a $500 deposit, the other with a $5,000 deposit . . . which would you choose?
4. Offer a Reasonable Due Diligence Fee. If you're sure, pending a home inspection, that this is the home for you, you and your agent have completed the necessary 'homework,' and you have loan pre-approval, why weaken your offer with a due diligence fee that is totally immaterial?
5. Keep Contingencies to a Minimum. A contingency is a pass/fail situation and if the contingency is not met, the sale may collapse. To a seller, a contingency is a reason for the sale to fall through, so the fewer you load into your offer, the better. Frankly, the Due Diligence Period is the ultimate contingency. Let's eliminate the contingencies along the line of, 'This offer is contingent on the approval of Aunt Mini who will be in town to tour the property in two weeks.'
6. Pay Your Own Closing Costs. If you can. Everything you ask the sellers to pay on your behalf comes off their bottom line, and to a seller, the bottom line is almost everything. If you need to ask the seller to pay certain items on your behalf, look for ways in the offer to offset that - which usually means adjusting the price upwards to accommodate the additional expense.
7. Be Personable. While the sellers are focused on the bottom line, they are also human. Chances are they've loved this house and would like to have the next owner love it too. It can help to write a short personal letter to the sellers to accompany your offer telling them a little about yourself and why you like their home. I've seen it make the difference in multi-offer situations many times.
8. Don't Low Ball. Everyone would like to 'steal' the property. But in an improving market, it's just not going to happen. In most neighborhoods, well maintained and prepared homes are selling within a few percentage points of a realistic listing price. Clearly, nobody is going to come down from a fair listing price by, say 10%. So don't start your conversation with the seller by making a ridiculous offer.
9. Listen to Your Agent. At GreatNest and The Vincent Group, we work with home buyers every day. We know how to negotiate a sale, what's apt to work and what won't. Put that expertise to work for you. Look at us as trusted advisers who can help you get the best property at the best possible price and terms. It's what we do.