So, you think you’re buying a house this weekend?
Last weekend at Eleete Real Estate we wrote 16 offers for buyers who thought they were going to be buying a home, yet none of them came home with the keys. All 16 offers were at or above the asking price, but in 8 of those cases there were more than 5 offers on the homes, and in all cases there were competing offers. Now while we did have an outstanding weekend in sales, we are back to house hunting for these 16 families.
To put this into perspective, most of these offers were in the starter price range of $200,000 to $400,000, which has become increasingly competitive due to skyrocketing rents which are not only driving renters to buy, but also driving investors into the market place who are flush with cash. As an example, a two bedroom, one bath home that came on the market in hip Southeast Portland at $559,900, our clients wrote a robust offer at $600,000, only to learn that the winning offer was for $645,000.
Landing a home today requires larger earnest monies, healthier down payments, and when competing with investors and especially foreign investors, it will drastically increase your odds if you have cash. This said, most home buyers do not have cash, so how do you win? Here are 5 basic steps followed by 5 risky and bold steps that will increase your odds to have your offer selected:
Basic Steps:
- Select a great Realtor® and get into the property first to give you the most time to prepare.
- Be fully educated as to the most recent bidding wars and understand values.
- Be fully approved by a local reputable lender and fully know your limits.
- Review the disclosures and bring in experts (with permission) to review the property condition prior to making your offer.
- Write a letter of introduction and potentially include a photo for the seller.
Bold Options:
- Earnest money – Make it 5% or higher and have it become non-refundable upon removal of the home inspection contingency.
- Waive or modify the financing and appraisal contingencies – Do your homework up front and know that you can get the loan regardless of the appraisal.
- Offer to pay for the repairs found by a home inspection.
- Close the loan as fast as possible and then allow the seller a flexible period to vacate the property rent-free.
- We will never encourage our clients to do this, however, there are buyers who will waive their inspection contingencies and will release their earnest money to the seller immediately. To be this confident, these buyers typically have done some inspection due diligence up front, they are seasoned, they can afford to lose the earnest money, and they know they will close on the property, so they do not see this as being of any risk.
At Eleete Real Estate, each of our broker teams has an experienced Senior Broker and all of our brokers have access to our leadership team of Chris Kuehl (24 years of experience), Julie Williams (18 years), and Lee Davies (31 years) to act as additional counsel in these situations. It is our goal in all cases to educate our clients so that they can confidently make decisions on their own. We do not want to see clients overpay or take on unwarranted risk, but at the same time, make sure they are realistic about the current buying climate and strategies.