Are you living in a seller's world?
The Real Estate market is hot, hot, hot! 🔥And that means we are living in a seller's world right now. The market isn't expected to be balanced for quite a long time. Even if it slows down, that doesn't mean the market will go down. Some home buyers thrive on the competition. Many are so discouraged by it.
So, how do you choose a Real Estate professional who can help you navigate the market and win your dream home?
1) Choose an agent with a great reputation. As an agent who works with both buyers and sellers, I can tell you first hand that the agent who represents the buyer can make things smooth or they can make things miserable during the transaction. A good agent can tell who is going to be good and professional on the other side of the transaction and will let the seller know. They can tell by how an offer is written and presented if the agent is going to be a good at at keeping things calm, smooth, and moving along. Offers can be won on that alone. I know because I've won some because of this.
2) Choose a great lender. It is best to talk to the agent's preferred lenders and choose one of them if you feel you have a good rapport with them. As an agent, I'm very choosy about the lenders I refer to my clients. They don't have people fall through after the preapproval and they will get the job done on time! Also, my lenders will call the listing agent to let them know the buyer is going to be able to follow through and cover appraisal gaps. My lenders have helped me win some challenging offers that may have been overlooked, such as VA buyers.
3) Have proper expectations. Choose to view homes you would make an offer on. You don't need to look at every single house in your price point. Know your priorities and stick to them. Expect to make several offers before you win a contract. Don't wait until it is time to move from where you currently live to start looking. Give it a few months at least and have a backup plan (extend lease, live with family, rent an AirBNB, or something else) in case it takes longer than expected. Don't get discouraged if it takes a while. I've heard some agents say it took their clients 13-14 offers before they got the one. OK, hopefully it won't take that long but if you're in the hottest area or the hottest price point, it just might. Remember, sometimes you have to kiss a few frogs before you find the prince!
4) No contingencies! Sorry Charlie, sellers are not taking contingencies even if you're only waiting for your house to close. You either need to sell and get a leaseback or find a place to stay until you can get into the house. Or, if you can qualify for both houses, you can buy before or while you're selling.
5) Listen Linda listen! If your agent is experienced (and they will be because you chose wisely - see #1), they will be able to give you solid advice on how to structure an offer. That doesn't mean you're going to win it but you'll sure have a better opportunity. If your agent says it will take an appraisal addendum to win the offer, meaning you'll pay the difference, then sign an appraisal addendum if you can.
6) Make your walk away offer! And make your highest and best offer! Make an offer so that if you don't win it, you're OK with it and you're glad you're not paying more than what you offered. No second guessing after you lose that house. For example, if you offer $320k on a $310k house and find out later it sold for $325k. Don't say, oh I would have gone to $325k. Just do it! Oh, and there are so many great offers coming in that sellers often don't come back and try to negotiate.
7) Expect to cover the appraisal gap. For example, your purchase price is $400k and you offer $450k. The appraisal comes back at $410k. You will cover the $40k difference in addition to your down payment. Don't get caught up in the appraisal value. More than 50% of homes in the Raleigh-Cary/Triangle area are coming in below the appraisal. That doesn't take into account the cash buyers who are not getting an appraisal. Most homes are selling for 10%-15% over list price. The appraisal is for the lenders assurance not to set the value of the home. The true value of the home is what buyers are willing to pay. The appraiser uses old closed comparbles to come up with a value for the lender. Your purchase will be the new comparable for the next buyer who pays over appraised value. Which brings me to the next point, your very experienced agent will be able to give you a range in which they expect the property to appraise. If they say the home you're purchasing for $450k and was listed for $400k will appraise for $390k - $410k, then expect the gap to be $40k-$60k and be prepared to cover it. Make sense? This is also important because if the listing is already way above what it might appraise for, then you need to be aware. We know, it is insane but that is what you have to be willing to do to win the offer.
8) Remember, it is all about the seller! You may not like it but, making an offer is about making it easy peasy for the seller. If the property is hot and you're comfortable, consider letting the seller know you're not going to ask for repairs. If the seller needs a leaseback or seller possession after the closing, consider giving it to them if you have somewhere to stay. If the seller wants to close on a certain date, make it happen. It isn't hard. I know it is inconvenient but it makes it easy on the seller and takes you off the market.
9) No love letters!💔 The National Real Estate Commission has recently strongly advised against love letters stating you're in danger of being in violation of fair housing. We realize this isn't the intent and need to follow suit. Besides, it really comes down to the facts. Sellers are receiving an overwhelming number of offers. I personally put them on a spreadsheet with the facts so they can compare.
10) So what went wrong? Sometimes, you can get an idea of what you did better. Agents cannot reveal the winning offer or any offers for that matter. They can tell you where you ranked and maybe what you personally could have done better. So, let's say they received 15 offers, where did yours rank? #1, #2, #7, last place? Where did you rank in due diligence or earnest money? Would an appraisal addendum have helped? Would a properly written offer have helped. Oh, and don't get me started on verbal or email offers. Put it on the form! Would it have helped to have an agent representing you instead of going it alone? Ahem, yes! Think about it, even an average agent will make a transaction much smoother than someone who thinks they know what they're doing but really doesn't. They know how to follow some of the rules and don't need to take up a lot of the listing agent's time.
It's a moving target people! Keep in mind, the seller's market is a moving target. You need someone who is experienced with moving targets and who isn't wearing a blindfold. This brings me to the last and first point - Find an experienced agent who is getting people under contract.