By: Melanie K. Fleet, 2014
DISCLOSURE: First, let me say: bidding wars are the exception, not the RULE. You will not ALWAYS be in this situation, and there are still plenty of deals out there and over-priced homes in any market that you could possibly get for less. But it's fair to say we're going into the height of the season and March-June is most likely when a buyer may encounter this scenario. We're talking those no-showings-until-the-OH, offers-due-Monday, only-one-of-its-kind-on-the-market kind of homes! Don't be overwhelmed by the idea - it's all about being prepared, working with a great agent and having a strategy in action!
1. Make sure you are pre-approved BEFORE you start looking at property. This may seem obvious to many, but it's about much more than just your agent knowing you're qualified before taking you out. It's about YOU knowing you're qualified. It's about knowing your buying power, how much you can afford, how much your monthly payment will actually be, how much to expect for closing costs, and so much more. But even beyond that, you do actually need that little piece of paper from your mortgage lender when you submit an offer to purchase. The same goes for a cash buyer - even without a mortgage, be prepared with a bank statement or letter from your accountant. Most sellers won't even consider an offer without documentation proving your ability to pay.
2. Bid aggressively. This of course is the #1 way to win - bid highest and bid boldly. The really difficult thing about a competitive market is that as a buyer, you're ultimately bidding blindly. If you bid too low and lose out, you may regret not going higher; but if you bid high and win, you may always wonder if you could've gone lower! What you need to do is ask yourself this: do I WANT to own this home, how much can I afford, and how will I feel if I don't own this home? Sit down and break down the monthly costs - you'll be surprised to see that a few thousand in a mortgage often breaks down to only a few extra dollars per month. Secondly, know what the home is worth in this market and speculate what it may be worth in the future. And make sure to go over recently sold homes in the area with your agent so that you can make an educated, competitive offer - without over-paying.
3. Be flexible - close however quickly (or slowly) the sellers want. It doesn't always come down to the money. Your agent should 100% be connecting with the list agent before you submit your offer to get the low-down on the sellers situation. You might not be able to find out everything, but typically you'll get an idea. Offer to close whenever they'd like, whether is be in 30 days or longer (for fast closings always consult with lender first to ensure it can be done). Maybe it's vacant and they're still paying a mortgage so the sooner the better. Or they might be a sell-to-buy, i.e. also looking for their own home; so tell them you're willing to push the closing out until they find a home and leave it to be determined. Allowing the sellers room to breathe will go a long way!
4. Write a personal letter. In real estate, we call this the "love ya <3" letter. While your real estate agent should be presenting your offer with a summary of the terms and a little background, it can't hurt to write a letter yourself. Often times sellers have their own emotional attachment to the home, so they might connect and want it to sell to someone who will appreciate it as much. Write about yourself, or your family, how long you've been looking, how much you love the home and why you love it, and how you envision your future there. It won't always win, but you'll be surprised how much it could help!
5. Be sure you're working with a good agent. Many buyers don't realize how important this is. Not only should you connect with your agent, you also need to feel confident that they know their stuff. They should have experience, a proven track record, and a good reputation within the real estate community. Ask them how they communicate. How many clients are they working with at any given time? Do they have time for you and will they be consistently available? Do your due diligence when choosing representation - research them, ask around, check out their website and ask for references from past clients if they aren't readily available on their website. Remember, your agent is your liaison and it will be their responsibility to guide you and negotiate on your behalf so that you achieve your real estate goals.
6. Make your first shot, your best shot. Which means hitting all of the above. In this kind of market, you don't always get a second chance!
...and then, CROSS YOUR FINGERS! :)
Stay tuned for more Smart Buying tips in the upcoming months. Have other questions or topics you'd like me to discuss? Any and all feedback is always welcome and appreciated!
