March 15, 2016
Being A Buyer In A Hot Seller’s Market
As Paul “Bear” Bryant once stated, “It’s not the will to win that matters—everyone has that. It’s the will to prepare to win that matters.” Being a buyer in a scorching seller’s market can be frustrating and can try even the most patient of home seekers. Earlier this month, the NWMLS produced a publication stating that Home prices in King County hit new highs in February as buyers tried to outbid each other for the sparse inventory in much of Western Washington. Additionally, the number of single family homes for sale in King County down nearly 30 percent from a year ago. Frank Wilson, immediate past chair of the Northwest MLS board suggested that buyers should look 15 or 20 percent below their limit and be prepared to go over list price if they have any hope of success. All of this can discourage buyers from getting the process of owning a new home started, but having a knowledgeable agent who knows some of the tips to sweeten the pot can make the process end in success. Let’s take a look at some of the techniques that can help you edge out the competition for your dream home.
- Offer Price – In a seller’s market, it is not always wise to try and come in with a low offer to later negotiate up. Even if buyers are having to escalate and pay a little more to get into a home, they are making it up on interest rate savings which are now historically low. While a good agent will be able to negotiate with your best interests at heart, be aware that in certain market conditions, offering asking price or more may be your best move.
- Earnest Funds – Some sellers may consider an offer better to an identical one if the earnest money is better. As a buyer, you will be paying those funds at closing anyway, and those funds will be returned if an inspection of financing are not approved by you.
- Preapproval – Submit Proof of Funds Documentation. Match your preapproval letter to your sales price and date it the same day as your offer.
- Possession Date – Recently, I spoke to a seller who was most impressed with an offer that extended the closing/possession date, allowing their family an extra few days to make sure the construction of their new home was finalized. Because the buyer’s agent knew that the seller was waiting for their home to be finished, the buyers were prepared to make their offer more attractive by offering to work around the seller’s schedule.
- Escalation Clause – Ever bid on ebay or at an auction? Maybe you couldn’t be near your computer so you set your bids to increase when someone new came in and offered a higher bid than yours. This is similar to an escalation clause, which allows increases by the amount you set ending at your ultimate high bid. If your agent hasn’t suggested this, talk to them about how it can work for you.
- Pre Inspection – Performing a pre inspection allows a buyer an advantage in the seller’s eyes because it means that an offer has been made and an inspection has already been done. This means that they will not have to worry about an inspection contingency causing the sale to fall through after the purchase and sale has already been agreed upon, and eliminates future negotiations and haggling between parties. If your dream home awaits, this can be a great advantage to making your offer the most attractive.
Some or all of these techniques may work for you depending on your situation and a good agent to guide you can mean the difference between living in your ideal home or missing out because of a better offer. If you write the most attractive offer, your chances of acceptance are far better than those of a buyer who is unprepared. So be equipped with knowledge, a good agent and prepare to win that home of your dreams.
Call me today with any inquiries or strategic advice for your situation. (206) 465-9400