Submit your highest offer upfront and put the seller’s wants first, and you will be calling that house a home in no time
You see the perfect house on-line and you call your agent to schedule a showing. The house is perfect! It has the gourmet kitchen, open floor plan, lots of storage, the fenced in yard for the dog…it has everything you want and it is in the perfect location!
Because the house is perfect for you, it is also perfect for everyone else. Such properties quickly generate multiple offers in a very short time, but only one of those offers succeeds — and you want to ensure that your offer is the one that succeeds. To ensure that happens, you need to place the best offer in a market that has significantly favored sellers for many months.
Once you have found that perfect house, you should prepare to jump in with a strong offer that should contain these elements:
Address seller’s anxiety
You’ve probably heard the old adage that “cash is king.” Because a cash offer eliminates sellers’ stress about appraisals and loan approvals, “cash is king” with most sellers. While that is true, most buyers don’t have the luxury of submitting an all-cash offer for their dream home. Most buyers will require some sort of financing.
If you can’t submit an all-cash offer, you will be required to produce a pre-qualification or pre-approval letter with your offer. Your letter should be from a reputable local lender. Having represented many, many buyers over the last many years, my observation is that local lenders tend to be more thorough in issuing a pre-qualification/pre-approval, which limits potential issues further into the home purchase process. Also, a mortgage pre-approval instills greater confidence that a standard pre-qualification, because all the buyers’ required documentation has been submitted and lender approved. Lastly, the letter should highlight a credit limit at a loan level in line with — or slightly above — their target purchase price. See the ins and outs of home financing.
Submit Your Best Offer Upfront
Several months ago, I was working with a buyer looking to downsize to a ranch style home in southern Wake County. He and his wife had bought their first and only home many, many years before and no longer had the need for their large home. When we first met, I showed him the recent price history of homes in their target area, many with closing prices at or well-above list price.
After a few weeks of looking, we found a home in their desired area, price range, and amenities. It was the perfect house for them. We talked about our offer strategy, and after many, many minutes of discussion, he decided to place an offer several thousand dollars below list price. As one might guess, our offer was not accepted and they were very upset that they had lost the house.
The Moral of the Story
The moral of this story like many home purchase stories in this market is that as a buyer, you should start with your highest and best offer, beginning with price and including all of the components of an offer. The highest offer isn’t always the one chosen, but in a strong seller’s market, offering less than list price isn’t a winning strategy. While price is very important, it is not the only consideration. Other things to consider include; deposit monies (in North Carolina that includes due diligence and earnest money), closing and due diligence dates, personal property requests, and other seller concessions. Never underestimate how an extensive due-diligence and or earnest money offer may show your willingness to “place skin into the game”, by showing how serious you are to see the offer through to closing. See my recent post on buyer sabotage.
Avoiding Buyers Remorse
When working with home buyers, I always plan to meet with them several
days before looking at homes to talk about their goals and aspirations for their search. One of the points that we discuss is
how badly they might be willing to offer on a house once they are ready to submit an offer. For many buyers, including my buyer from above, the prospect of placing an offer above asking may seem foreign. In this market, a few thousand dollars may separate a winning bid from a losing bid. One of the points that I always relay to my buyers is that you want to place an offer that you “won’t wake up tomorrow morning feeling guilty that you could have gone higher, or you won’t feel remorse that your offer is too much for you to afford.”
Prepare to deal with inspections and repairs
No house — not even a new one — is perfect. And the more competitive the market, the less inclined sellers are to make repairs, especially to nit-picky minor flaws. During the home purchase, there are two rounds of negotiations. The first is when the offer is submitted and the second is when repairs are submitted to the seller. The purpose of the various inspections is to verify sound condition and to point out items that may need replacement or repair down the line.
I try to counsel my buyers to focus on the critical repair items; e.g. broken HVAC, plumbing, electrical, etc. and not to nitpick on minor or cosmetic issues. Doors that may not close correctly or missing GFI outlets do not necessarily necessitate a repair buy the seller, nor a huge price concession.
In a housing market heavily weighted toward home sellers, having buckets full of cash, waving inspections and offering significantly above asking price are a winning strategy to land your dream home. Having buckets of cash and the willingness to pay exorbitantly are not available to the majority of most home buyers. By addressing the needs and anxieties of the seller, placing your best offer in a timely manner and focusing on the necessary repair items are just one of many strategies to win the home of your dreams.
About Log Pond Realty
Home is where your story begins. A home is where hopes and dreams are born, memories are made, and lives are lived. We would love the opportunity to assist you to write your new story.
We can be reached via email at email@example.com or by phone at 919.589.3576.
We service the Triangle region of North Carolina including Raleigh, Cary, Apex, Holly Springs, Morrisville, Fuquay-Varina, Durham, Chapel Hill, Wake Forest, and Garner.