Sundell Realty's Guide for Successful Offers in Sellers' Markets
by Andrew Sundell
Sellers’ Markets Can Be Intimidating to Buyers
For many home buyers, the thought of buying a home during a strong sellers’ market is intimidating. The possibility exists that you find yourself in a multiple-offer scenario on many houses you’re interested in. If this task seems daunting, it’s because it actually is – but don’t worry. There are strategies to navigate this tricky environment, and choosing the right agent is of the utmost importance.
Choose the Right Agent
When you enlist the services of any reputable business, you expect to receive professional care & service. It is no different for residential real estate sales. Many agents are self-employed, thus, they have the freedom to conduct their business to their comfort level. As a result, the industry is full of many unproductive & unknowledgeable agents – many of whom are part-timers. In today’s fast-moving market, you simply must choose a seasoned, knowledgeable, & tech savvy real estate agent. Choose an agent that has real-world experience navigating sellers’ markets. A good agent will stress the importance of seeing houses as soon as possible. They’ll also structure your offer to make it attractive to the seller, yet secure for the buyer.
Additionally, you can enlist your agent to send a “feeler” mailer out to your desired neighborhoods or areas. If there are any homeowners thinking of selling, you may be able to do the deal off market. Some agents may not be willing to do so…but don’t hesitate to ask – it’s their loss.
View Your Desired Properties Quickly
So you’re committed to buying a house in the near future…what’s next? Well, you should ensure you begin working with a reliable agent as soon as possible. Your agent will get your home search & showings set up. They’ll also ensure you’re prepared to submit offers quickly. A sellers’ market is defined by low inventory and high buyer demand. Because of this, you must make sure to see new listings as soon as they come on the market. Your agent should send you listing updates as frequently as possible per the Multiple Listing Service in your area. Furthermore, make it a priority to arrange your schedule so you can see houses as quickly as possible.
Submit Strong Offers If Comps Suggest
Picture this – your dream house (and the dream house of many others) was just listed in a desirable neighborhood. You’ve just scheduled your showing to see it.
In a sellers’ market, your next step should be asking your agent to run comps prior to even seeing the house. Ask your agent to draw up the offer prior to the showing, too. If the comparable recently sold properties suggest a value at or near the list price, your initial offer should be strong. Houses of this desirability in a sellers’ market frequently receive multiple offers in the first few days. In many cases, these houses settle over the original ask price. This is why it is imperative that you are aggressive out of the gate. In addition, your tech-savvy agent will make e-signing available for all of the contract paperwork to increase efficiency.
In addition, if you have the ability, you can offer a cash purchase with a quick settlement. Majority of home buyers do not have this ability, but many sellers do appreciate an expedited settlement. Also, with a cash purchase the seller does not have to worry about the lender financing falling through or issues with the appraised value.
Other Tactics for Sellers’ Markets – Not Recommended
If you find that every single house that you are looking at is facing a multiple-offer scenario and you realize you will probably have to pay at or above full ask, there are some additional “offer-sweeteners” you can utilize – but, proceed at your own risk as I do not recommend any of these.
To enhance your offer you can waive the inspection contingencies. This means you are buying the house “as-is” with no professional inspections, and no inspection repair negotiations. This is a very precarious situation to put yourself in as there may be extremely costly or dangerous material defects with the house that the seller is not aware of or has not disclosed.
Another tactic you can use is to waive the appraisal contingency. If you plan on using a mortgage lender to help finance the purchase of your home, they will request an appraisal be done of the property. Many times in a sellers’ market, the over-ask offers can result in houses that do not appraise for full value, and the mortgage lender will refuse to lend the full amount – essentially because the appraisal report says the house is not worth it. Waiving this appraisal contingency means the mortgage lender will lend what they are comfortable with (based on the appraised value), and the buyer will make up any difference between the agreed-upon sales price and appraised value in cash at settlement. This could result in a hefty amount.
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