Top 5 Tips To Winning Offers in a Seller’s Market
Here we go again, with inventory down, and competition heating up in the Costa Mesa real estate market. If you are in the market to buy a home soon, join the crowd! In many areas of Orange County, we again have inventory issues, as I mentioned might happen in my first couple of posts of the year. It’s important as a buyer to educate yourself with regards to pocket/private listings, and how to handle multiple offer situations. Here’s a winning strategy with tips to avoid common buyer mistakes.
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Top 5 Tips To Winning Offers in a Seller’s Market :Be Clear About Your Priorities
Understand what is important. Separate your housing wants from the needs, especially if you are both making decisions about a home. If there are disagreements, it’s best to hash-out these matters prior to “seriously” looking at homes. I would recommend going to open houses long before you’re ready to buy and and taking notes. What you like, and what your significant other likes. It’s good to talk out loud – tell each other what you do and don’t like about a particular home. You will quickly start to understand each others motivations. This way you can develop your priorities, so when the day comes to write an offer for a home, you know what is important.
Top 5 Tips To Winning Offers in a Seller’s Market: Work With Your Own Buyer’s Agent
This is so important! In California, we area allowed to have dual agency, where an agent can represent both buyer and seller in a transaction. Working with a good buyer’s agent only will strengthen your negotiation when the time comes for an offer. Many buyers don’t realize that if you are contacting the listing agent directly, and sharing information, you are seriously lowering your bargaining power. Why? The listing agent is representing the seller, and they are trying to get the seller the highest price for the property. Also, they must share all pertinent information with the seller. So if you were to view a home with the listing agent, and you were to say, “I can’t believe it! This is my absolute dream kitchen and my dream home!” , then the price you will pay for the home probably just increased.
Don’t forget, working with a buyer’s agent in real estate is free – employ a good buyer’s agent who will fight for you in your corner, and you will thank them every day you own that home. Think you are skipping out on having the inside tract on a home that a listing agent has? Trust me, they are either only in the deal for themselves or the seller, a pocket listing sale is only a bad idea for a buyer. Finding the right buyer’s agent who really knows the market is a winning strategy!
Top 5 Tips To Winning Offers in a Seller’s Market: Be Available & Ready to Act
Writing an offer and going skiing for weekend? You might want to change your plans, or have your smart phone strapped to your ear. In a competitive real estate market, being readily available is critical. If you just have to get away, especially for an “Off the grid” trip, wither change your plans or hold off on making any offers. I promise you, in competitive offer situations, every minute counts. Your intent comes through loudly when you act quickly, jump through hoops immediately, and get counter offers back into the listing agent. It shows a lot to the seller as to how badly you want the home. I have been in multiple offer situations several times, and I will tell the seller every time how quickly someone returns a counter offer. Seller’s get very turned off when all the counter offers are back except yours- they think either you don’t care or you aren’t; that interested in the home. Be sure to communicate with your agent – if you are planning a trip, we have great tools for smart phones that can make you available.
Being available when buying a home is essential to winning in a competitive market!
Top 5 Tips To Winning Offers in a Seller’s Market: Is Your Offer Complete & Competitive?
One of the biggest mistakes homebuyers make, is not making sure their offer is complete and competitive. And to be fair, the large wight of that statement falls on the buyer’s agent. Do you have your pre-approval? Do you have your cash statement? Have you given those to your agent? He or she will absolutely need to present that along with your offer. If you are in a multiple offer situation, it is imperative to have this together. When I review multiple offers, I will put the incomplete ones to the side every single time. I think that those buyers are either not prepared, don’t seriously want the home, or might not be truly qualified to purchase.
Checks for Completion & Accuracy:
- Do you have a strong Pre-Approval letter from a reputable lender? (Not a Pre-Qual Letter!)
- Are all offer terms correct as discussed with your agent?
- Is the property address and the tax parcel # correct? (you’d be surprised how often this mistake happens)
- Are the correct names listed correctly as the buyer? Do the names match the Pre-Approval letter?
- Are all necessary addenda & desired contingencies checked and/or attached?
- Are all signatures & initials inserted where needed? You would be surprised how often this is missed
Checks for Competitiveness:
- Is the offer price realistic for the situation & market conditions?
- If there are more than three offers, are you being realistic with your offer price? (is it too low?)
- Using a financing contingency? Will the lending terms look favorable to the seller?
- Do you have a home you must sell first? (prior sale contingencies are an added risk to the seller)
- Are you asking for closing cost credits? (often a deal-killer in multiple offer situations)
- Is the offer overloaded with contingencies? Are they all necessary?
- How long is the inspection period? The shorter the better.
- Is the seller or listing agent encouraging removing certain contingencies (common in some areas)
- Have you written an introductory letter about you or your family? It is sappy, but it works – 43% of winning offers use letters to the seller- Here’s a sample: download
It’s common for buyers who might be writing their first offer to write with over reaching contingencies and restrictive terms. A lot of times we agents will call these “practice offers” knowing they will never get through. In a multiple offer situation, a buyer’s restrictive terms will never win the deal. It’s best to go with the flow, leave your normal buyer contingencies in place, and not go crazy with extra over reaching restrictions as a buyer.
Submitting complete and competitive offers is a winning home buyer strategy!
Top 5 Tips To Winning Offers in a Seller’s Market: Think Like a Seller
When buying a home in a strong seller’s market, you will likely find yourself competing with others. Accepting that reality is imperative. You cannot think like winner and loser in a real estate deal, especially when there are multiple offers. In a competitive situation, you have to put yourself in their shoes. They will look at multiple offers, figure out who is offering the most money, has the best terms, the least financing restrictions, and likes who you are. In that order, trust me. Those last two sentences might be the most important on this page. Pssst- here’s a secret – 70% of sellers go with the highest offer.
When navigating a seller’s market, being aware of and respecting the seller’s position is key – keeping in mind your own best interests of course. So rather than drawing lines in the sand, focus on all the points you can agree on, and remain flexible with other matters.
Remember how you felt when you first walked in the home. You loved it. It is emotional. Remember to strive for a “win win” outcome with the seller, and you’ll be more likely to win the home of your dreams.