Top Ten Ways to Prepare for Competitive Offers

By
Real Estate Broker/Owner with Elevations Real Estate, LLC www.BuyFortCollinsHomes.com

Top Ten Ways to Prepare for Competitive Offers

Top Ten Ways to Prepare for Competitive Offers

If you're buying a house in today's turbulent market - you'll likely be competing with other buyers for the same narrow inventory of available properties.  If you you want to actually be competitive, here are a few things to prepare for.

10.  Be prepared to act quickly!  Those who are able to act quickly to submit an offer have a substantial advantage.  These buyers have likely already lost out on a couple of other properties because they hadn't been prepared to compete and have used valuable time to learn their lesson.  Do your home work up front:  Study this list, study the neighborhoods where you think you'd like to live.  In many cases, you'll have just a few hours to make a decision and that seems scary.  Keep in mind that what you are trying to do with your offer is secure a position with the Seller that gives you 'dibs' on this property.  The only way to do that is to present an offer the Seller will sign ahead of any others he/she has received.

9.  Decide on what your "walk away" number or condition is.  As part of your ability to act quickly, you need to know what your absolute bottom line number is or what your absolute must-have features are.  There many elements to a real estate purchase, the least of which are how much you genuinely like the property.  Irrational exuberance has led many homeowners to buying houses they weren't prepared to actually own.  Work with your agent to come up with a list of must-haves.  Work with your financial advisor to determine what your bottom line is so that if the numbers don't work, you don't let an emotional trigger determine whether you have over paid for a given home or not.

8.  Plan to leave a little money on the table... just not too much.  In a competitive environment all bets are off.  Historical values become merely reference points in an accelerating price range.  Full price offers and over-asking offers have become far more common in the ultra-competitive price ranges.  Seller's may not feel obligated to provide the kinds of concessions they've been providing for the past few years (e.g. closing costs, transfer fees, etc).  The cleaner the deal and the easier it is for the Seller to see you're serious about buying the property, the greater the chance they'll pick your offer.
Top Ten Ways to Prepare for Competitive Offers
7.  Use the contract to your advantage.  Your agent should know the contract inside out.  They know the areas that spell uncertainty for the Seller.  Typically these uncertainties are the Inspection Objection, the Loan Conditions Deadline, and Insurance Objection to name a few that are specific to Colorado.  If the house is newer, consider waiving your inspection resolution and opt for a Home Warranty.  Tighten up your deadlines so the Seller doesn't have to wait more than a week for your home inspection to be completed.  There's been great success in acknowledging the inspection is for major mechanical, structural, plumbing and electrical consideration and you won't be asking for a laundry list of items to be repaired or replaced.  I've heard of Buyers bringing along their inspectors to the initial showing of a highly desirable property and doing an impromptu inspection during the showing period.  Lastly, don't even think about contingency offers on the sale of another home you have to sell.  Determine early on if you can swing a bridge loan or flat out qualify for your next home without having to sell your existing one.

6.  Consider providing additional earnest money.  In our market it is typical for earnest money to be approximately 1% of the purchase price.  If a Seller sees a contract with double the earnest money or more, that tells them a)you're serious about their property and b) you've got liquid funds available right away.

5.  Consider putting additional money as down-payment.  Even if you qualify for a low-down-payment type of loan but you've got 10 percent or more you could put down as cash at closing, not only will this help your bank feel better about you as a borrower, it will help the Seller see the value of your solvency and resolve to see the contract through to closing.

4.  Speaking of banks, see a lender as early on in the process as you can - preferably BEFORE you start to look for homes you think you can buy.  Your negotiating power is directly related to how solid and confident your buying power is.  If you don't know for sure you can qualify for the loan it will take to buy the house of your dreams, then there's no sense negotiating on a price only to find out after the fact that you cannot afford it.  If the Seller has a preferred lender they'd like you to be pre-approved by - do it.  It doesn't cost you anything and it is a tremendous act of good faith.

3.  Learn what an "Acceleration Clause" is.  No, this isn't the turbo button on Santa's Sleigh.  An acceleration clause is a clever contract writing strategy that basically tells the Seller you're willing to pay more than any other buyer by XXX number of dollars up to a purchase price of xxx number of dollars.  Many real estate agents a) don't know how this strategy works and/or b) don't like to write them because it may diminish a buyer's negotiating position.  Regardless, you should know what these are because even if you don't want to use one for yourself, you'll very likely be competing against a buyer and and agent who will use it.

Top Ten Ways to Prepare for Competitive Offers2.  Find a real estate agent you trust - preferably a REALTOR.  REALTORS are held to a higher standard of practice than non-realtors and typically have completed more demanding continuing education credit hours than non-realtors.  There's no formula for trust except that as a rule, trust must be earned.  If you don't personally know a REALTOR, ask a friend - even a Facebook, Google-Plus or Linked-in friend for a couple of recommendations.  Interview these candidates just like you would a baby-sitter or other care-giver - we're talking your hard-earned money and equity at stake here!  Ask the REALTOR if they work as an Agent or Transaction Broker (this is a Colorado distinction and may not be applicable in your state).  An agent provides a position of advocacy that a transaction broker is precluded from providing.  In Colorado, the only way to have a real estate broker work for you as an agent is to execute an Exclusive Right to Buy - Agency agreement.  It is in your best interest to know that the person handling the negotiation of your home purchase is standing firmly and legally in your corner!!

1.  And the Number One Way to Prepare for Competitive Offers is...  Trust your agent to do his or her job.  If you've gone to the trouble of interviewing and hiring a respected, experienced agent, tell them everything.  The more they know about your wants and dreams and lender pre-approval and "walk away" conditions, the better they'll be able to help you attain your goals.  They will be the ones to remind you of these critical desires if and when you end up on the Buyer Emotional Roller Coaster.  Your agent is your coach and is there to help you "get in the game" and compete at the highest levels.

NOTE:  These are simply the opinions of a 10-plus-year veteran of real estate sales and management.  This is not meant as legal advice and as such would encourage anyone to seek the advice of an attorney before making any decisions about buying real estate, signing a contract, obtaining a mortgage, or hiring a real estate broker as an agent.

 Northern Colorado Real Estate

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Re-Blogged 8 times:

Re-Blogged By Re-Blogged At
  1. Cheryl Ritchie 05/21/2013 12:55 PM
  2. Praful Thakkar 05/21/2013 01:24 PM
  3. Ginger Harper 05/21/2013 10:12 PM
  4. Will Nesbitt 05/21/2013 11:48 PM
  5. Melanie Narducci 05/22/2013 01:50 AM
  6. Joe Jackson 05/23/2013 06:23 AM
  7. Fred Griffin 06/01/2013 09:19 AM
  8. Michael Dagner 04/25/2014 04:24 PM
Topic:
Home Buying
Location:
Colorado
Groups:
Almost Anything Goes
"Whacked"!!!
Addicted to Active Rain
Bananatude
Bartender, Make it a Double
Tags:
earnest money
sellers
down payment
concessions
strategy
full price
fort collins realtor
competing offers

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Rainmaker
421,699
Brenda Mayette
Miranda Real Estate Group, Inc. - Glenville, NY
Getting results w/ knowledge & personality!

Great blog, Chris! We're starting to see more and more multiple offers here.  The need to ACT QUICKLY is KEY! From identifying the property, getting showing booked and having documents ready to go.  I've recently "fell in love" with electronic signing as a way to help.  Cheers to ongoing success!

May 21, 2013 09:44 PM #19
Rainer
31,955
Gail Nyman
Re/Max United Real Estate - Dunkirk, MD
Every House Has A Story
Great post! Should be required reading for all buyers before they go out with agent. I always tell my buyers that they have to assume there will be other offers to compete with.
May 21, 2013 10:16 PM #20
Rainmaker
1,215,444
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Chris, ten excellent points and required reading for all buyers. We are going to see more of this in the future.

May 21, 2013 10:59 PM #21
Rainmaker
2,100,874
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Very well put together post and points....The focus is clear and the picture of the horses coming out of the gate cracked me up..good post

May 21, 2013 11:43 PM #22
Rainmaker
259,126
Marjorie Taylor
Landon Homes - Saint Augustine, FL
New Homes in St. Augustine Florida

AWESOME Post!  Acting quickly with clean deals over asking price with a pre-approval letter in hand... winning combo

May 21, 2013 11:47 PM #23
Rainmaker
97,436
Chris Hardy
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com - Fort Collins, CO
Northern Colorado Real Estate

I'm so thankful to all of you who have stopped by to comment and/or saw fit to recommend my post as a feature.  It is amazing how warm a feeling it is to have so many comments and to be part of such a great community like Active Rain!  You all are the BEST!!

May 21, 2013 11:58 PM #24
Rainmaker
2,422,266
Captain Wayne - Rowlett Real Estate School
REcampus Fully Accredited Florida ONLINE & Classroom Training in Destin, Pensacola Florida - Panama City Beach, FL
Rowlett Real Estate School / Owner and Instructor

Hi Chris, Congratulations on your Featured Post.  Great Job!  Keem em coming!

May 22, 2013 12:34 AM #25
Rainmaker
263,516
Kate McQueen, REALTOR®
The Flory Team - ReMax Professional Group - Spring, TX
Houston Bay Area, League City-Bay Area Homes

Good information!  I posted a very similar blog recently, wish I could have been featured!

May 22, 2013 12:48 AM #26
Rainer
66,792
Melanie Narducci
Hillscape Properties, Inc. - San Francisco, CA
Your San FranciscoBay Area Real Estate Expert
Congrats on the feature, Chris! This post sets the bar for blogging in my book. We seldom have multiple offers on new construction, in fact I usually advise buyers to have an inspection even on new construction and I always gift a home warranty. But here in CA a builder is liable for defects for ten years, so a home warranty plus the builders liability may well cover the risk of foregoing an inspection for a buyer of a home less than 10 years-old.
May 22, 2013 01:43 AM #27
Rainmaker
1,267,591
Edward & Celia Maddox
Century 21 Arizona Foothills - Gilbert, AZ
EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD

This is a great article on preparation. Thanks for sharing with all on Active Rain.

May 22, 2013 01:53 AM #28
Ambassador
1,146,797
Bryan Robertson
Intero Real Estate - Los Altos, CA
Broker, Author, Speaker

These are absolutely perfect suggestions for the challenging market.  They need to be careful of using sharp offers (accelleration clauses) as they can drive prices up a bit.  Otherwise, all good advice.

May 22, 2013 04:49 AM #29
Rainmaker
97,436
Chris Hardy
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com - Fort Collins, CO
Northern Colorado Real Estate

Wayne, Kate, Melanie, The Maddox team, and Bryan- thanks so much for your comments, praise and suggestions.  Really appreciate you taking the time to write!

May 22, 2013 12:27 PM #30
Rainmaker
253,090
Annette Thor
Connecticut Homes and Commercial Fairfield Cty,CT reinct.com - Westport, CT
Residential & Commercial Real Estate Broker in CT

Great suggestions for buyers Chris, Do you mind if I copy this list to my buyers- well said! Congrats on being featured.

May 23, 2013 12:45 AM #31
Rainmaker
97,436
Chris Hardy
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com - Fort Collins, CO
Northern Colorado Real Estate

Annette-  By all means!  Please share - That is always my hope for blogs like this is that they can help Buyers be prepared Buyers and help Brokers be the kind of Brokers they strive to be!!

May 23, 2013 02:43 AM #32
Rainmaker
45,874
Micheal St. Peter
The Bayshore Group - Traverse City, MI

Our market has turned inside out and multiple offers are becoming the norm. Great post and ideas

May 23, 2013 03:31 AM #33
Rainmaker
97,436
Chris Hardy
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com - Fort Collins, CO
Northern Colorado Real Estate

Thanks, Michael.  Glad to know you're market is picking up, too!

May 23, 2013 04:16 AM #34
Rainer
24,721
Charles Bradford
Northbridge Realty, LLC - Indianapolis, IN

Great, solid advice Chris!!  As inventory gets lower and markets get more competitive in many parts of the country, these are things we all need to have as a checklist.   I also agree with Norma -- this would make a great handout piece for buyers.  Press on!!

May 28, 2013 03:14 AM #35
Rainmaker
97,436
Chris Hardy
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com - Fort Collins, CO
Northern Colorado Real Estate

Thanks, Charles - Always happy when the stuff I write strikes a helpful chord with folks!!

May 28, 2013 03:22 AM #36
Rainmaker
264,136
Pat & Steve Pribisko
Keller Williams Greater Cleveland West - Westlake, OH

Chris: This is an excellent blog on today's market conditions--the Seller's Market, and how to deal with it.

Jun 01, 2013 11:18 AM #37
Rainmaker
97,436
Chris Hardy
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com - Fort Collins, CO
Northern Colorado Real Estate

Thanks, Pat & Steve - I so very much appreciate your comments!

Jun 02, 2013 12:20 AM #38
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Rainmaker
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Chris Hardy

Northern Colorado Real Estate
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