[You might also enjoy this more recent article on the subject.]
Low inventory continues to impact the local housing market. At certain price points in this competitive market, buyer strategy is a huge factor, considering that many properties receive multiple offers within hours of hitting the market. What’s the best way to win in a competitive situation? Housing Wire published a helpful article How to beat out other homebuyers when there is no inventory, which contains good advice on preparation, making the offer, and standing out. Recommended reading for all buyers currently in the market.
Here are some additional tips that stem from some recent personal experiences.
- Don’t overbid – Unless you are paying cash and waiving an appraisal, or have enough cash in the bank to make up the difference if the appraisal comes in low, making an offer ridiculously above market will be considered frivolous. The house will probably not appraise for the contract value, resulting in further negotiations or cancellation of your contract.
- Don’t ask the seller for anything – In a competitive market, it is unlikely a seller would choose an offer requesting 3-6% of the sales price in seller paid closing costs and a seller paid premium warranty, over a “clean” offer asking for nothing. That also goes for appliances and fixtures that seller has already stipulated don’t stay with the house.
- Make it easy on the seller – Keep the offer clean (see #2). Be prepared with a pre-approval letter from a recognized mortgage company with a good local reputation (I prefer seeing letters from local lenders over mega-banks and online lenders).
- Make the seller love you -While I often tell clients that once the decision is made to make an offer the purchase process becomes a business transaction, it doesn’t hurt to try to appeal to the sellers interests, emotions and values. I would never discourage my clients from writing a short note (not a 1000 word essay) to the seller about why they really, really want the house.
So you want to win in a competitive market? Be prepared and be mindful of what the seller wants. If you are in the market or will be soon, I would love to talk with you about buyer representation. Give me a call or email.