Since the onset of Covid-19 the real estate market has been hotter than ever. Prices have risen to record highs, but even with such high prices the demand for those homes hasn’t waned. Buying a home has become an extremely competitive situation, leaving many buyers disappointed time after time. If you’ve been out there trying to buy a home you know that the current practice is for a seller to list a home, have showings for a few days, then hold an offer date when everyone submits their offers.
What can you do to improve your chance of getting the home that you want?
Are you willing to look past the sparkle and do a little fixing up?
If you’ve been out looking at homes you know that some homes just show better that others. While some genuinely have more and better upgrades, many of the homes that really sparkle have great staging – the WOW factor. For sellers, it’s true, staged homes almost always command a bigger price. Sometimes the perfect home for you isn’t the staged home that looks like a page from a decorating magazine. Sometimes the perfect home is one that just needs a fresh coat of paint, better lighting or some minor updates. Your agent should help you look past the staging to see the quality of the home and whether it fits your wants and needs. Sometimes all it takes is a little imagination. Look past the decor of the home and really SEE the home. The home that doesn’t show as well will probably still sell in multiple offers but there may be less competition resulting in a slightly better price.
Go over the research with your agent
Before you make an offer your agent should present you with comparable sales from recent weeks. Looking at recent sales will give you a good indication of the price that the seller will be expecting. If a home that is highly comparable and in the same neighbourhood sold last week for a certain price, you know that the seller expects to get something similiar.
Preparing your offer – What will give us the best chance of winning?
How much competition is there? Once you register an offer your agent will be informed about how many offers there are on a property. Your agent will NOT know the content of any of those offers, but the more offers there are, the more competitive it will be.
Deposit – I recently had a client ask me why they couldn’t include a $1,000 deposit in their offer. The deposit is really a way of demonstrating your level of confidence as a buyer. Your deposit should be a reasonable amount relative to the price of the home you’re buying. Sometimes the expected deposit amount will be indicated in the listing. Also, the more offers there are on a property, the more the deposit amount may factor in the seller’s decision to accept your offer.
Closing Date – Your proposed closing date can be a big factor in making your offer stand out. If your closing date closely matches the seller’s preferred closing, your offer will be more appealing. After all, if the seller is moving in to a new home 30 days from now but you’re proposing a closing date of 90 days, the deal may not work out.
Conditions – This is a big consideration and one that makes many buyers nervous. In a buyer’s market or in a balanced market it is generally accepted practice to include conditions allowing 5 business days to arrange for financing and inspection of the home after which the home is considered sold. During the conditional period the buyer will get a firm commitment from their mortgage provider and can bring in a home inspector to take a close look at the home for any potential problems. When you are in competing offers, these conditions are usually the first thing to go. The firm deal usually wins. You are best advised to have good communication with your bank or mortgage professional and be confident in your ability to secure a mortgage. Know your numbers and work within that amount. With regard to the home inspection, have your agent ask the listing agent if there has been a pre-listing home inspection done and ask to see the report. Also, have your agent ask questions, including the age of key features like the furnace, central air, roof, windows, and any other questions regarding the history of the home.
Price – This goes directly back to knowing what homes in the area have been selling for. If other homes in the area have been selling for $900,000, you know that this home likely will too. You need to trust that your agent knows the market, knows the seller’s pricing strategy and knows what the seller will reasonably expect to get for their home.
When in Multiple Offers, Don’t Lowball!
Whenever I have a listing and multiple offers come in, it never fails, there’s always at least one lowball offer. Picture this; homes in the neighbourhood similar to the seller’s home have been selling for around $800,000. Several offers come in, most within a reasonable range around $800,000 and one offer comes in a $695,000. This is never a really effective tactic. If there are ten offers and nine of them are within range of the expected price, you know that the lowball offer will not be taken seriously. Step one is to be intentional and shop for homes within a range that fits the amount you’ve arrived at with your mortgage professional. Then, if you really want to buy the property, work with your agent to prepare an offer that can be competive.
Can a personal letter to the seller help?
The answer to this is yes, and no. If there are a few offers that are virtually identical, perhaps your personal letter can make your offer stand out. If you let the seller know why you love the home and tell them a little about yourself, it may make the difference. In the end, price is usually the biggest deciding factor, but when you’re competing I think that it never hurts to include the letter to the sellers.
Finally – What about pre-emptive offers?
If the seller of a home has a set offer date, but, indicates that they would entertain pre-emptive offers, you may want to jump into the mix right away. This doesn’t rule out multiple offers. In fact, often pre-emptive offers still bring multiple offers. When your pre-emptive offer is registered the listing agent has to notify all agents who have shown the home that there is a pre-emptive offer and when it will be presented. When that happens, others may come forward to present their offers too. Occasionally, if only a few agents have shown the home you may be the only offer, but once the notification goes out, others may come forward. Your best chance to score that home in a pre-emptive offer is to see the home as quickly as possible upon being listed and offer as quickly as possible after that. As for what to do about price, work with your agent to offer a price that could win on the actual offer date. The seller isn’t going to accept a lower price just because it came in early. Basically, when it comes to pre-emptive offers, make it an offer they can’t refuse!
The most important thing to keep in mind throughout the process of shopping for a home is to make sure you have a real estate agent you can trust. Communication is the key. If you have any questions about buying a home, or listing your home to sell, contact me!