By Caroline Abkar | Red Tree Realty | July 2016
How do you snatch the home of your dreams in a seller’s market? Inspired by my latest success story, I will share what you should know as a buyer, even more so a first-time buyer in a hot seller’s market where inventory is low and you are competing with other buyers for similar properties.
During your home search
So you decided you want to buy a home – exciting! Here are some steps you can take during your home search that will set the stage for a successful outcome.
- Get financial qualification
Shop your lenders as a parallel process to your home search and obtain financial pre-approval so that you can submit it at the same time as your offer. Pre-qualification is good, but not as solid as a pre-approval. In a seller’s market, that can make the difference between your offer and another buyer’s offer being retained. A pre-approval will require you to submit important documentation including tax returns, pay stubs, and the lender will run a credit report. This will put you a step ahead and confirm your budget. This is also the time to shop and negotiate rates, discount points, and fees so you can choose a lender you are comfortable with. A good lender will help you understand your monthly payments, down payment, fees and closing costs. Once you have made an offer, changing lenders is not desirable and can in fact delay the transaction and put it at risk. Your REALTOR® should be able to suggest local lenders, who are much more responsive and streamlined than large lenders, and can be just as competitive.
- Stay on top of the market
Be proactive in your home search. Ask your REALTOR® to set up automated notifications for you which will fire real-time listings directly from the MLS so that you are informed the minute a home matching your criteria hits the market. Be as specific as possible in your criteria, and open about what matters most to you and your family, your budget, and timeline. If you are set on living in a specific area, make that clear. At the same time, stay open to the fact that your criteria may change as you view homes. Does the location mean more to you or that large yard? We often see buyers change their minds on their criteria and emotionally connect with a home rather than rationally.
- Be available
The home buying process does require patience and time. Some buyers know exactly what they want the minute they see pictures in a listing, while others need more time. More importantly, understand as a buyer that you will need to invest your personal time to view homes and that in a seller’s market, you need to submit an offer very quickly when you find a home you are seriously interested in. When a potential listing hits the market, your REALTOR® should try to schedule a viewing for you before the first mass showing. The sooner you submit an offer on a home you love, the higher the odds your offer will be considered.
When writing the offer
Now that you have found the home you want, there are a couple of important elements that will help you stand out and increase the odds of your offer being selected.
- Understand the seller’s perspective
A good REALTOR® will attempt to better understand what is important to the seller and try to incorporate those elements into the offer if they are acceptable to you, the buyer. A seller whose preferences are met right off the bat in the offer will be much more likely to choose that offer over others that don’t appeal as much or that require counter offers.
- Put your best offer on the table
In a seller’s market, it is unwise to begin with a lower figure than what you are willing to pay for the home, in hopes of negotiating. I believe your odds of having your offer accepted in the first place will only increase if you put forth your best offer from the get-go. A knowledgeable REALTOR® will attempt to find out the context in which your offer will be received. Are there many offers on the table already? Are they above asking price? These elements will help you write the best offer. Remember there is more to an offer than the asking price: deposit, contingencies, and deadlines. Your REALTOR® should advise you appropriately on each, as well as other tips and tricks to make your offer stand out and be more personal.
During the transaction
Your offer has been accepted – congratulations! This is when the intricate closing process kicks off and emotions can get high. Inspections need to take place, negotiations with the seller on repairs may be necessary, and the loan needs to be funded, all in time for closing. Here are some crucial things to keep in mind.
- Be even more available
During the transaction, be responsive and understand what is time critical. Understand that the home purchase process is equivalent to taking on a part-time job in terms of time demand, until escrow closes and the keys are in your hands! Expect to review and sign many documents and disclosures. Submit the required documentation to the lender, escrow and your REALTOR® asap each time, as delays can have a negative snowball effect and make parties unhappy or less willing to cooperate. Good faith all throughout the entire transaction is of utmost importance.
- Get help from your REALTOR®
Have your REALTOR® manage the timeline from scheduling inspections to staying on top of communications with all parties including inspectors, lender, and escrow. Not all real estate agents will do this for you but I personally believe this is of great value to buyers and much appreciated, especially buyers who work demanding full time jobs and have trouble coping with the additional stressors of the home buying process. A good REALTOR® is the glue that holds the entire process together and makes sure the ball isn’t dropped and that all information is well communicated.
Personally, I also like to encourage my clients to ask questions and share their state of mind with me. I want to make sure they are making the best possible decision for themselves and their family, first and foremost, and are not left in the dark at any stage of the process.
- Ask questions
It is normal to have a lot of questions come up during the transaction. Inspections for instance often reveal findings, sometimes many. Your REALTOR® should help facilitate communication with the experts so you can better understand these findings and put them in perspective. Sometimes, findings require further inspections or homes need remodels, and your REALTOR® can connect you with all kinds of specialized inspectors, contractors, designers, etc. REALTOR®s refer clients to connections who consistently deliver and so it is in these providers’ best interest to be responsive and provide great service at a reasonable price. Know that it is illegal for brokers and REALTORS® to receive referral fees from any vendors, so you can rest easy there is no financial bias.
- Give and Take
Finally, stay focused during negotiations on what is most important to you so that you have some flexibility and willingness to give a little on the things that are perhaps not so important. Remember what made you fall for this home and try not to get entwined in emotions. Trust your REALTOR® to handle and navigate the transaction on your behalf. Keep in mind that there is an entire team of professionals working this transaction toward the common goal of having you own the home of your dreams.
Questions? Comments? You can reach out to me anytime.
I am always listening.