Tips for Buyers in a Tight Market
TAKE MY OFFER, PLEASE!
By Deborah Rutter
In lots of areas, inventory is tight again. Homes are moving quickly for over asking price, with multiple offers, and often from cash buyers. How can you compete with all that, if you are from out-of-town, or are buying with a loan or other average conditions? There is hope! Sellers are also human…and motivated, and complicated like all of us. Getting to “yes” can be as simple as a few steps:
1) BE FIRST: I tell my clients that we don’t necessarily have to be the BEST offer, just the FIRST offer. If a home comes on the market on a Friday morning, waiting until Sunday might be too late. It could be under contract, or worse, the seller could be fielding multiple offers by then. Get solidly pre-approved with a trusted, responsive, local lender and see properties as soon as you can. You want to be the buyer who is negotiating with the seller, not competing with other buyers. If you are in a hot market area, take pains to see properties as soon as they come on the market, if you can swing it.
2) BE MINDFUL: Sellers remember who tracked in mud, left the toilet seat up, showed up late for their appointment, or stayed too long after the showing to chit-chat while they waited for you to (finally) leave. Be on your best behavior in every way. You are basically on a date, and you want the buyer to pick you, not have a laundry list of reasons why negotiating with you might be full of issues.
3) BE LEGIBLE: Many agents are using electronic document-signing software. It’s great! It lets buyers sign any document, anywhere, and at any time. But more importantly? It makes contracts legible. Chicken-scratch printing on the contract via the hood of a car might be necessary in some instances (and certainly a sign of the past), but in general, taking time to write up an offer that can be read, easily, with no assumptions, additional clarifications, or misinterpretations about hand-written entries is important. If your agent isn’t using a tool like this to write up a contract, be sure YOU can read what is written. If you can’t, chances are no one else can either. Some lenders simply reject unclear contracts, or contracts that have gone through the fax machine (gasp!) one too many times and are too smeared to be legible. Your offer gets no love if no one can read it!
4) BE TARGETED: In every negotiation, there are things that matter to you a lot, but the seller might not give two shakes about, and vice versa. Save your fisticuffs for the things that matter to you most. If you are buying below your budget but want the seller to accept a long closing timeline so you can keep the kids in the same school for a few months, expect to be asked to pay a bit more (you don’t have to agree, just be prepared). If the most important issue to you is to have the seller share the closing costs because you are short on cash, accommodate the seller in ways that might mean more to them: longer closing time, or maybe the ability to stay a few extra days after closing for reduced rent. (Note: In some states, the seller might automatically pay buyer closing costs, but that is not the case everywhere.) Be sure you are making yourself competitive by saying yes to anything that isn’t specifically a no for you. It can be weeks between the offer and actual closing, so save your bargaining chips for things that really matter.
5) BE TIMELY: Most markets have a season. Just like bathing suits or wrapping paper, there are times when those items are in high demand and fly off shelves, and times when they sell slowly. Homes are a commodity, and most areas have times of the year when the inventory is higher, and homes sell faster. The perfect house for you will come on the market when it comes…whether it’s the day after Thanksgiving or the middle of summer. If you have flexibility in your timing, figure out the “off-season” in your area and keep your eyes peeled then. Less inventory means less competition.
6) EVERYTHING ELSE: Cash is better than a loan, no appraisal is better than getting one, and forgoing an inspection is a winner for the seller (but not really for you). In a competitive environment, you need to match your risk tolerance, timing, financial resources, and stamina with the market conditions to get what you want. That might mean paying more, living further than you prefer, buying something more modest, or waiting patiently.
A final note about the heart-felt letter to sellers…in my opinion, it’s a toss-up. Sellers mostly want more money, not less, and perhaps a few other things you just can’t swing, but also might not know about. A love letter can be off-putting if the timing is wrong, the tone is wrong, or it’s full of grammar and spelling errors (if your seller teaches English, for example), just as often as it can be the thing that sways an undecided seller. It’s not common that a seller is fielding two or more offers that are so similar that a letter is the deciding factor, so think carefully about this!
Tight markets are a good thing for sellers, less fun for buyers. But there are strategies and options to help you shine a bit more. Money is king, but there are other things that can hedge things in your favor, too, and you should discuss these with your buyer agent!
Deborah Rutter is an Associate Broker at Nest Realty with passion for teaching. She knows buyers and sellers make the smartest decisions for themselves when they are armed with data and insight. She has taught first-time homebuyer education classes, and is a featured contributor on our blog.