Be the winner…
A couple of years ago all of the strategies revolved around finding ways to get the lowest price out of a seller. Then, it morphed to finding the line where the bank would sell. Over the last few months, the next evolution has come…
Winning the bid.
Often we see good houses come on the market and go under contract in less than a day. These homes are often pulling in multiple offers, some considerably above the asking price. Yet, many buyers are still convinced that we are in a market that favors them. We aren’t… except for a few less desirable neighborhoods or some very high price points.
master_bedroom_2 (Photo credit: lane.bailey)
In order to actually buy a house, instead of just making offers, there are a few steps you can follow to “win the bid”.
- Get a serious pre-approval. If your mortgage person isn’t pulling your credit and spending some time getting it, it probably isn’t worth getting. Sellers see an offer with a pre-approval as being MUCH more serious than one without.
- Have a down payment. The larger the down payment, the more stable to buyer. Of course, this is going to vary depending on the buyer segment (1st time buyers usually don’t have 20% to put down… I understand that).
- Cash is King and FHA is the Stable Boy. FHA loans are the toughest on sellers. Not only does the property need to appraise on value, but it has to meet specific criteria for condition. Most houses meet everything, but an old roof or a missing handrail can turn into anything from a headache to a nightmare for the seller (and the buyer). A cash sale, on the other hand, is pretty assured. Conventional loans fall somewhere in the middle… and VA are more rare, but slightly tougher than FHA on the seller.
- Be ready to close ASAP. The longer the seller has to wait between an agreement and a closing date, the more that can go wrong and the more expenses that can get racked up. Aside from the seller’s house payments and utilities, there is lawn upkeep and maintenance on the house. Not only that, but if you are waiting 2 or 3 or 4 months to close, the seller may think you could develop a case of “cold feet” and change your mind.
- Price heals all. We used to tell this to sellers… poor condition can be corrected with price. Much to their dismay, that “correction” was usually an over-correction. Now, the shoe is on the other foot. Buyers that have issues with some of the above conditions can “heal” their offers with price. But that “healing” is likely to involve a larger bump in the offer than one might think… Of course, in the end, it comes down to the seller and what is most important to them.
In next week’s post, we’ll look at 3 sample offers and compare them…
