It's getting brutal right now in the DFW market. Lots of cash offers and lots of homes getting multiple offers.
Here are my bull whacking tips for winning what is quickly becoming all out war for home buyers or in Texas terms a Steer Wrestling Contest.
- Bid quickly. 1st day on the market is best. Know what you are willing to offer before you see the house.
- Work with an agent who uses programs like Docusign or DotLoop to sign your offers online and get them in quickly.
- Bid like you mean it. Lowball offers are of another era. Lowball a seller today and you might not even get a call back or a chance to rebid.
- Lots of people think bidding is only about price. There is the front page price, but there is so much more to an offer....lots of terms, times, down payment, option money, earnest money, favorite title companies, leasebacks, deposits, and on and on. Upfront price helps, but terms may seal the deal.
- Consider bidding without seeing the house first.
- Consider bidding over list price. There are plenty of homes selling over list price.
- CMAs may not tell you the whole story. If prices are up 10-12% over last year and expected to rise another 10-12% this year, basing your bid on homes that sold 6 months ago may leave you in the dust....or worse yet in your apartment.
- Consider interest rates. If you continually loose bids and interest rates go up 1-2% this year, how does that affect overall what you may pay for the house over the next 30 years. If you pay $305,000 for a $300,000 house, you might pay $5000 more today which financed might be another $35/month. If interest rates rise 1% that might mean another $250/month. Which is better for you. If you don't understand interest rates and FV and PV functions, ask your lender to run scenarios for you or explain it to you. (Do this before you find the house, don't waste time after you find the right house.)
- Never bid even numbers....like $200,000. Bid $200,015 or $202,177. The extra $177 might win the bid.
- Use a local, reputable, well-known lender like David Bradley at Just Mortgages for your loan. If the lender can underwrite your financial ability before you bid, include that information in the pre-approval letter you submit with your offer. Have your realtor explain this to the listing agent. There is a difference in lenders.
- Offer to close quickly. Some lenders can close a loan in 8-15 days. If you can find one that does this use them. Don't make a seller wait for 30-45days.
- Offer non-refundable earnest money.
- Offer a second earnest money deposit.
- Put down more earnest money than the next guy. Put down double or triple the normal earnest money.
- Offer to pay some of the closing costs a seller might typically pay. Pay for your own survey. Pay for your title insurance. Pay HOA transfer fees.
- Offer a leaseback to the seller. If you can close in 15 days, but don't need the house for 30 or 45 days, offer the seller a chance to stay rent free during that time period. That can put sellers at ease that #1 you will close, #2 they can use the equity in this house towards the next purchase, #3 they don't have to pack and move and risk you not closing. Many loans will allow you to lease the home back to the seller for up to 60 days.
- Waive or forgo as many contingencies as you can. That might include inspection and appraisal contingencies. If you are adamant about an inspection or appraisal, tighten up the inspection timeframe or offer to cover an appraisal deficiency.
- If you know your lender requires a 5% or 20% down payment and you have the cash to put down more, consider writing the offer for 7% or 25% down. Inform the seller you have the extra cash to make up an appraisal deficiency.
- Back in the heyday of bidding wars in the San Francisco Bay area, buyers would bring wine, flowers, fruit baskets, and perhaps even a vacation certificate, along with a heartfelt letter of why they wanted to start or raise a family, or retire, or whatever reason it was they wanted the house. Include pictures of your family and pets if you think it will help.
- Do you have anything you can offer the seller to sweeten the deal like restaurant certificates, hotel vouchers, airline tickets, spa treatments, lawn mowing service at their new house?
Beware of Risky Bidding
- Be wary of realtors advising you to include escalation or elevator clauses, that say something like you will pay $500 or $5000 or x% over the highest offer the seller gets. That could really get you in trouble.
- Be careful with appraisal contingency clauses. Appraisers are now legally on the hook for overvalued appraisals and need to be able to PROVE value. Putting in clauses that you will cover appraisal deficiencies may be telling the appraiser that both buyer and seller and agents agree that the house may be overvalued and push that risk back on you with a low appraisal.
- Be wary of agents pushing pocket listings. If they'll cheat their seller, they'll cheat you too.
- Take a Buffet lesson, Don't bid on what you don't understand. Know your neighborhoods, Know your prices.
- Online tools are a reference in values, but often way way off. Sometimes too low, sometimes too high. Don't use Zippo, Tax Apraisals, or Blackfish to determine what you should bid. If you are even tempted, read their disclosures on margin of error. It's funny to see people want to use these values when bidding, but get upset once they are ready to sell. Remember these are very general estimates. A great broker can help guide you on a better estimate of value based on the other nine homes they've shown you.
Your agent did not cost you the bid.
Normally this is the case. It's not your agent's fault you did not win. That is if they are as quick to the draw as you are. Can they show you homes the 1st day on the market? Can they prepare offers immediately after you see them? Are they giving you the tips above? If not call Bruce today at 214-675-6992.
DFW-Dallas Fort Worth Metroplex Market
If your agent is not quick to show and quick to bid, give us a call. We're not only agents, but also brokers. There are lots of new agents in the market, who just don't have the experience to understand it yet. Don't wait until next weekend to see a house that will likely already be under contract. Call us 1st or last, but do call and let's get you a house.