Home Buying Tips in a Seller's Market
If you are a home buyer in Texas, it comes as no surprise, we are in a seller’s market. Purchasing a home in a seller’s market can be very taxing on a home buyer, especially in the more competitive price points. Rather than getting frustrated, focus on these simple strategies to give you a leg up against the competition.
1. Make sure you present a clean and complete offer package
Seems like common sense, but you would be amazed how many sloppy offers we see. This sets a terrible tone for a listing agent and their seller. Your offer should include the proper contracts and supporting addenda and be complete and correct. Always make sure you have your lender pre-approval (or proof of funds for a cash offer) included with your paperwork. You want a contract that is clean and ready to be signed by the seller with no changes required. Going back and forth to clean up errors gives another offer time to squeeze in. The last thing you want to hear are the dreaded words “multiple offer situation”.
2. It’s not all about the price
No doubt that price is the largest factor in an offer, but it is not the “end all be all”. We have seen many sellers take a lower priced offer with better terms. Here are a few things you can do to strengthen your offer outside of just price.
- Shorten your option period and increase option money. 5-7 days can be plenty of time for you to do your due diligence, but a lot of buyers ask for as much as 10. Bumping up your option fee also shows you have “skin in the game” and are not just speculating. If you were selling your home in a seller’s market would you want to be tied up for 10 days for a measly $100?
- Close as quickly as possible. If your lender can get it done in under 30 days, push the envelope and get aggressive. Even if the seller wants or needs more time, it sends the message that you are serious and you can always be flexible for them.
- Shorten your financing contingency period. A lot of buyers ask for 21 days as their “out” for issues with financing. That is practically the entire transaction. If you have done the work to put together all of your docs for the lender in advance, 2 weeks should be plenty of time to know whether or not your financing will work.
- Let them know you will order the appraisal immediately. After your option period, the thing everyone has to sweat out is the appraisal. If they know you are tackling that immediately, it shows you are committed to getting this done and you really want the house.
- Cover some of the fees the seller would normally pay. There are a lot of negotiable fees like the title policy, survey, HOA fees, etc. If you are willing to cover some of them, it sends a great message to the seller that you are a solid buyer. Sometimes the difference between winning and losing a contract is hundreds of dollars not thousands.
3. Write the seller a personal letter.
There is a good chance this is a home where the seller has raised their kids and created life long memories. Trust me, many sellers do care about who is going to be buying their home and taking care of it for years to come. Make this a more personable transaction by writing them a letter and telling your story along with all the reasons you love their home and want to make it yours. It can work, we have seen it happen many, many times. If competing offers are very close on price and terms, the seller has to look at these kinds of factors to make a decision.
4. Make sure your agent builds strong rapport with the listing agent.
I ALWAYS make an effort to connect with a listing agent when I am making an offer with a buyer. I want them to know that I am full time, experienced and professional. And I am committed to making sure the channels of communication are always open. Most listing agents have a lot of pull with their clients, so you want them going to bat for you and your agent.
5. Get your lender involved
Have your lender reach out to the listing agent and re-affirm how strong of a buyer you are. Your lender is part of your team and they (much like your agent) want to see you succeed. If they can’t get the agent on the phone, have them send an email outlining all the reasons you are a strong responsible buyer.
Of course these will not work EVERY time, but we’re dealing with statistics and probability here. The more things you do right, the better your chances are to gain a leg up against the competition and help you land your dream home.
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