4 Tips On Making A Winning Offer
In A Seller’s Market
If you live in a city like Nashville where the real estate market has shifted gears into a seller’s market, meaning that inventory is low and home prices are rising, then you are probably aware of the inevitable “competition” that exists amongst home buyers. In a market like this houses are going under contract within days of being listed and sellers are finding that they are being bombarded with multiple offers at asking price and higher. Buyers need to be quick, astute and educated. Here are some easy tips for home buyers on how to make a winning offer that snags that perfect home away from other buyers.
Get A Pre-Approval Letter
Submit a pre-approval letter from a lender as it will alleviate an imperative question that the seller has, “Can they qualify for a loan to buy my house?” In a seller’s market a pre-approval letter is practically mandatory in order for a seller to even consider your offer. Another benefit in talking with a lender is that you will be able to establish what you can afford and get a grasp of how much of a loan you will qualify for. For example, $1000 borrowed on a 30-year fixed rate mortgage at 3% interest generates a mortgage payment of $4.22. Multiply that by 200 ($200,000) and you’re looking at an $844/month mortgage note. If $200K is the asking price of the home you’re interested in then bidding $10K more on the house will raise the monthly mortgage to $886.20 – Not a huge difference if that additional $10K gets you the house you want and outbids other buyers.
Get A Good Realtor
Any Realtor who does their job is educating you about market conditions and the Comparative Market Analysis (CMA) of each neighborhood you are interested in. Each time a house goes on the market, goes under contract, or is sold in your interested areas your Realtor should be making sure you get sent an email that furnishes all the information of the property. The Multiple Listing Service (MLS) can be programmed to automatically send email updates to clients, therefore no Realtor has any excuse not to keep you updated. A good Realtor does their homework and should be aware of how much buying power you have, showing you only properties that are within your reach. A good Realtor also guides you through the Offer to Purchase step-by-step, making sure you understand every aspect of the contract.
Stick Within The Right Price Point
After finding out the financial range you qualify for stick within that price point or slightly below. In a seller’s market you should stray away from salivating over properties whose asking price is at the maximum amount of a loan you will qualify for. Aggressive and viable buyers will offer more than asking price so position yourself the same way. If you qualify for a $250K home loan consider looking at houses that are priced between $200K - $240K, allowing yourself some buying leverage against other buyers who only qualify for that price range. Know the value of the home you are making an offer on by evaluating the comparable properties in the area. You don’t want to overbid on a property just because there might be a bidding frenzy over it. If this is the case, find another property. Always consider value first.
Consider Compromising Closing Costs, Closing Dates, Etc.
One way to make offers more attractive is to assume more of the closing costs, especially in a seller’s market. A lot of buyers like to ask for the seller to pay all closing costs when negotiating. This can result to a back-and-forth volley between buyer and seller and in some cases can kill the deal. Offering to pay half or all of the closing costs can definitely lure the seller into accepting your offer. Also, consider how long or how soon of a closing date would make the seller more comfortable. Some sellers may prefer a quick closing while others might need a little more time as they might be buying another home contingent on when their current home goes under contract. Just make sure you do not offer too soon of a closing date as you need to give yourself time to get financing approved, appraisals and inspections done, etc.
If you or someone you know is interested in buying or selling
a Nashville Home please contact:
The Lipman Group | Sotheby's International Realty
Office: (615) 463-3333 / Cell: (615) 509-1753