Ok. You get it. The market has shifted and it’s super tough and competitive to purchase a home.
Now you’re ready to get down to the nitty gritty.
The “How” to find and get your dream home.
1. Make a Strong Offer
What’s a strong offer? In North Carolina, we advise our home seller’s to look at a few major portions of the sales contract (which is now 15 pages long and growing.) First, price – duh! Is it above or below the list price? In the current market, it’s pretty rare to see homes selling below list price, unless there are other considerations (short sale, home renovations needed, etc.)
Second item we look at is the monies – i.e. due diligence and earnest money. There is no set amount on either of these, and we have seen as much as $5000 on a home priced at $150,000 and as low as $500 on a home priced at $600,000. This is where having real estate agents involved can significantly help your offer (more on this later.)
“It’s critical to understand the situation you’re in when you’re making an offer – is the seller more interested in due diligence money or do they prefer a higher purchase price?”
The third item we look at centers on concessions – basically what are you asking the sellers to do for you? Closing costs? Home Warranty? Appliances? When you’re the sixth offer on a home you typically don’t have much (if any) wiggle room for concessions from the seller.
The final item we look at is the type of financing. Many home buyers are perplexed when they make a full price offer and don’t get the house, only to discover later that the home may have sold for less than they offered. Typically this is because the accepted offer was cash. Lets make this clear – CASH IS KING. Most cash offers close quickly and without an appraisal, which means there is less of a chance that the buyer’s ability to purchase the home will fall through.
Of course, we look at the offer as a whole (remember it’s 15 pages!) but these are the main sections we go over with out clients when weeding through a pile of offers.
2. Have all Your Financial Ducks in a Row
If we’ve said it once, we’ve said it a thousand times – talk with a professional lender who can help you get a financial game-plan in order so that when you find your dream home it’s full steam ahead!
A lot of home buyers make the mistake of looking at homes before talking with a lender and they tend to find out one of two things: they don’t qualify to buy a home OR they don’t qualify to buy as much home as they’d like. The absolute best way to minimize this pain is to talk with a reputable and professional lender up front.
3. Be Reasonable
Everyone wants to negotiate – we get it! Part of our job as your real estate agent is to negotiate the best deal possible and make it a win-win for everyone concerned.
Except in this market! While, yes, you can at times negotiate. And yes, many of your friends/family/neighbhor 5 doors down all have a story of how they negotiated an awesome deal on their home.
Except it didn’t happen in this market.
Many clients have held their ground (read between the lines: been stubborn) and refused to be more reasonable in their offer, which ended up costing them a home they truly loved.
Bottom line: adjust your expectations to the current market conditions and be realistic, especially when there are other offers on the table!
4. Work with a Real Estate Professional
I know, I know, you’re rolling your eyes.
Here’s where he pitches us on the need to get a real estate agent involved so that someone else gets paid.
Not happening buddy. Not today, tomorrow, ever.
Whoa. Hold one for a second.
Three reasons working with a real estate agent is prudent for a home buyer:
In transactions where there were no real estate agents involved, home buyer typically over paid for the home by 9%-12%.
First, a real estate agent will know the market pretty well. Meaning they’ll know if the asking price, condition, and competition for the home are in line with the market or if you are about to get hosed. Another benefit is a savvy real estate agent may know listings that are coming on the market before you do, which could in turn help you get in ahead of the crowd.
Second, if there is another agent listing the home for sale, your agent will act as your fiduciary and guard you against over sharing information that could harm you or prevent you from purchasing the home.
Finally, the real estate agent may have a relationship with the listing agent, which is common if you work with an agent or team that does a high volume of business. This relationship could help your offer rise to the top in considerations when the agents are communicating back and forth.
Overall, there are several factors that go into crafting the perfect offer, especially in a multiple offer situation. Making sure your finances are in order prior to house hunting will save a ton of heart ache. Understanding the specific provisions within an offer that most sellers consider as their top line items will also give you an advantage when competing against other home buyers.
And of course, we believe that your best bet is to partner with a professional real estate team to help you accomplish your goal of owning your dream home!