But Can I BUY in this Seller's Market?
/I was in a closing with buyers the other day, and we got to talking. Closings are great for that, since buyers and sellers and agents are together for the first time, and relaxed, and telling each other all of the things they couldn’t share when they were negotiating.
The listing agent told us that some of the other offers were higher than ours. When we asked why they chose our offer, she said, “Well, I liked your lender, for starters. And I liked your timeline. And I just got the feeling that we could get the deal done with you.”
All of my messages to you recently have been about what a great time it is to sell, and all of the multiple offers and over-asking contract prices and crazy crazy market. Which is very encouraging for sellers, but could paint a discouraging picture for potential buyers. After all, why even try when you’ll be competing against so many others?
Well, the truth is that I’ve had a fairly good run with buyers lately. In the past couple of months I have placed offers for five buyers, and put four of them under contract — all winning in multiple bid situations.
So yes, it CAN be done!
Of course, it takes some “strategery.” More than I could fit into one message. But I wanted to share a little bit with you, just to reassure you that it is in fact possible to buy a home in this market.
Price: Higher is better, except when it's not. Sometimes there are other factors that incline a seller to take a lower offer over a higher one. Loan terms are a big one. Offers with FHA or other government program financing are almost always rejected in this market. These loans are laden with red tape and notoriously bumpy to close. And who needs to deal with that headache if you don't have to? Higher down payments are also more attractive than lower down payments, because they imply that they buyer has more cushion and will be more likely to withstand problems and make it to closing. And, of course, cash is king. Cash deals have no lender to deal with, and frequently no appraisal or inspection contingencies -- all of which make cash deals very, very attractive to sellers. The good news, if you're like the rest of us who can't scrape that kind of money together -- is that it's mostly the fixer-uppers that are attracting the cash offers. If the house can't be flipped, odds are much lower that you'll have to compete against a cash buyer.
Terms: Sometimes the non-financial terms of the contract can carry as much weight as the price. How soon can they close? Do they have any contingencies? Are they asking for anything crazy? If you can’t buy without selling your current home, or if you have any other out-of-the-ordinary contingent event that needs to happen before you can close, then . . . again, forget about it. The clean offer wins every time. And there are always clean offers.
Transaction Management: When deciding between multiple offers, I always look at who’s going to be on the other side of the table. Who we're working with determines how pleasant or unpleasant the next four to six weeks are going to be, and how smoothly the transaction will go. Is this an agent with a good reputation, with an established brokerage? Did he or she put together a clean, professional contract? Has our telephone interaction been positive? Did the lender reach out to me to offer further information about this buyer’s qualification? My favorite lender, Deana Hollstein, has helped my buyers win many, many multiple bids.
Who you work with really does make a difference.
There are, of course, many more factors, and other tactics that a good agent can use to increase the odds of winning a multiple bid. But I wanted to share these few with you, just to give you a more balanced view of the market, and to save any potential buyers out there from despairing.
Of course, as always, call me if you are thinking of buying OR selling. Or just going out for a glass of wine or some really good ice cream or something :)
