In July of 2014 there were 278 homes sold, down 5% vs. a year ago with 635 active invetory, up 41% from a year ago. The median sales price for all house types is $555,000, up 6% over the last year, and days on market is 33, up 50% from a year ago. There were 353 new listings, up 9% compared to Juy 2013 and 237 contracts, donw 17% from a year ago. The sold price vs. list price remains the same at 99% and there is just 2.3 months supply of homes but compared to 1.5 months supply in July 2013, that is an increase of 49%.
While these figures show an increase in inventory and days on market, the fact that there is only a 2.3 months supply of homes means that this is still a Seller's market. Buyers in popular Arlington neighborhoods may still expect to be one of multiple offers on a property within a few days of it going on the market. While this might seem daunting, there are quite a few steps buyers can take to prepare for this and put themselves in the best position to be the winning offer. Your agent should check with the listing agent to see if there is a deadline for offers and they are being reviewed all at once or they are reviewing them as they come in. You should also find out any specific terms the sellers are looking for, like a closing date, or specific title company.
Get pre-approved for financing
Make sure you are pre-approved for a loan, preferably from a reputable lender known in your marketplace. Just a pre-qualification letter where they have not checked credit or verified assets or employment may not be sufficient. Most lenders won't give full approval until the property has been identified and a contract ratified, but I recently had an offer on a listing where the lender had put it all the way through underwriting and with the exception of the appraisal, everything was ready to go. This enabled the buyers to be able to close in just TWO WEEKS! While some sellers might not be ready to move that quickly, this was a property that had been tenant occupied and was now vacant so the quick settlement was a plus to my sellers.
Offer the seller a post-settlement occupancy
Another tactic if you can settle quickly is to go ahead and go to settlement and offer the seller a post-settlement occupancy. While it is common to have them pay an amount equal to your daily expenses for principal, interest, taxes and insurance, I have also seen purchasers offer the "rent back" for free.
Consider waiving the appriasal contingency
Do you have enough cash available that you could put more than the minimum down if need be? Showing a larger down payment is also a strong point and that may also allow you to waive a contingency on the appraisal. While this is not necessarily something I advise clients to do, it may be the tipping point that puts your offer ahead of the others. Just be sure you can show that you have the funds available to increase your down payment if the appraisal comes in low, as lenders will base their loan to value ratio on the appraised price, not the contract price.
Offer to pay cash
Better yet, can you afford to pay cash for the property? A cash sale with no financing contingency puts the seller at ease that there will be no tie ups because of underwriting issues. The Regional Sales Contract we use in our area allows for alternate financing as long as it doesn't cause a delay in settlement or cost the seller any additional funds. A large earnest money deposit also helps the seller feel you are serious and won't walk away.
Waive a Home Inspection and take the property strictly "as is"
Another step I do not recommend, but is often the reason for a winning offer in our area, is not making the property contingent on a home inspection. If you go this route I would strongly suggest you get a home warranty so that if systems break down you will be covered with a small service fee. Or you could consider doing a home inspection for information purposes only and taking the property strictly "as is" as long as you have the right to cancel the contract if the inspection turns up a major problem. And make the home inspection contingency as short as possible. Sometimes you may even be able to get permission to do an inspection before you write the contract. While this might mean you spend the money for the inspection without knowing you will get the house, it can make the difference between you getting your offer accepted or not.
Use an escalation clause
Escalation clauses have also become popular in our area. This means you may offer list price (or something above or below list price) for the property, but agree to escalate to a higher price over and above another offer up to a set maximum. This is usually most effective when paired with waiving the appraisal so if it goes well above list price the seller doesn't need to worry whether it will appraise.
Be honest with yourself
It all comes down to how much you want the house, and at what point you are comfortable walking away. Be honest with yourself. I have had more than one buyer who lost out on a house and then said they would have paid more, or would have waived the home inspection contingency or appraisal if they had known that was what it would take to get the house. Make your offer as strong as you can, because you don't usually get a second chance.
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Long & Foster Realtors
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