In case some of you have been sleeping under a rock over the last couple months, the real estate market is back! The days of trying to beg someone to buy your home and giving it away are long gone. It seems as though buyers are now bidding on properties like their lives depended on it in our South Florida Area. Inventory is shrinking and competition for marketable properties is fierce. Not only does the everyday family have to deal with the volume of buyers in the market now-a-days, they have to deal with the all-powerful, CASH buyer.
Since, Warren Buffet advised America that he wants to own as many single family homes as humanly possible, that seems to be the next hot thing for investors and their cash. Hopefully, this is not an example of sheep being led to slaughter, but that’s another story all together.
With times like this in our area, buyers must be prepared for battle when looking for a homes in a reasonable price range. (I have a feeling that if you are looking for a multi-million dollar compound, your competing buyers are slimmed down quite a bit ;)). I am going to touch on the most effective tools for this battle for all of my buyers out there.
At the end of May 2013, Kiplinger’s Personal Finance released, “Making an irresistible offer”. They list six things to consider when making an offer.
1. Be Pre-Approved. If you are serious about purchasing a home, this is a MUST. Browsing for homes is fine if you are in the early stages of thinking about buying. If you find something that you like and would like to see the inside of, chances are that without a Pre-Approval from a Bank/Mortgage Broker, a real estate agent will not give you the time of day. This is the ESSENTIAL first step in the home-buying process. Do not even think about submitting an offer without a Mortgage Pre-Approval. If for some reason, your real estate agent try’s to do this and takes you out to view properties, etc, you are wasting everyone’s time.
2. Do Not Low-ball. Sellers in the current market ARE getting close to list price and sometimes more. This fact is only true if the property is priced correctly. Offer what the property is worth! For you agents out there, if someone like a “flipper” comes to you and says, “I want to buy for 50 cents on the dollar.” DO NOT WASTE YOUR TIME! Even banks are asking for market value, because they know that they can get it. If you really want a property, know that you will have to pay for what it is worth.
3. Maybe use an Escalator Clause. This is a basic clause in an offer that allows you to increase your bid if another offer comes in above yours.
4. Add more to your deposit. The more money that you put down, the better your offer will look to a seller. Not to mention, your mortgage payments and loan will be lower, moving forward.
5. Do not include many contingencies. Sellers will look to the least bumpy road to the sale. If your offer is loaded with contingencies and competing offer is smooth sailing, which offer would you take? Kiplinger’s Personal Finance gives an example, “If you have enough cash, temper an appraisal contingency by assuring sellers that if the appraisal comes in lower than the purchase price, you’ll pay the difference or split it with them (up to a certain amount).”
6. Personal Letter This is by far my favorite battle tool. With your offer, write a letter to the seller. Tell the seller that you love the community. Tell them what you love about their house. Tug at some heart strings. Keep in mind, people that are selling their home have great memories of that home. Capitalize on that by pointing out the features of the home and how you will not change a thing about them. Please do not tell the Seller how you are planning to gut everything and remodel! This will not work in your benefit.
Well, there you have it. If you follow these tips, your offer will have a much better chance to be accepted before any others!
Thanks to Kiplinger’s Personal Finance and FloridaRealtors.org for the great information included in my rant.
Looking for a home on your own? Are you nuts?? I’m here to help! Contact me today!