Are you trying to buy a home right now in this crazy sellers market? Well, I’m going to show you how to gain an inside edge when you get set to make your offer on a home. Are you ready? Here we go.
Across the country and where I live on the Central California Coast, the real estate market is absolutely crazy right now. The seller is definitely in the driver’s seat. With a super low inventory and lots of buyers looking to purchase a home, we have multiple offers on property—sometimes well over asking price.
So how do you get a seller to notice your offer above all the rest?
1. Make sure you’re already pre-approved with a lender and have your pre-approval letter in hand, along with your proof of funds. I mean, this one is a no-brainer. Have all your ducks in a row before you make your offer.
2. Move quickly. Do not procrastinate. The early bird really does get the worm right now. Where I live in North Monterey County, houses go on the market and the appointment book fills up that day. On one of my listings this past year, I had 50 agents contact me in two days to show one of my new listings. So please don’t hesitate. If you do, you may miss out on your dream home. If you wait, it may be gone before you even decide to make an offer. Don’t be one of those people that just aim, aim, aim. Pull the trigger.
3. Understand the market and your competition. This is super important. Don’t think in a seller’s market with a low inventory of homes and multiple offers over list price that you can come in under list price because you wrote a really nice buyer’s letter. That’s not going to happen. And please don’t tell your agent, “Well, the Zillow’s estimate says it’s only worth…,” You’re not going to get the house. See, here’s the deal: when the market is hot and the inventory’s low and there’s multiple offers over list price…you get the house. That’s the deal. Your offer gets accepted above everybody else’s . That’s the deal.
4. Make your offer as clean and shiny as possible. Sellers love this. Remove or shorten the contingencies on the contract, if you can. Remove or shorten things like the appraisal contingency if you have some extra cash and you can handle that window if the appraisal comes in low. If you know that your loan officer’s already fully approved you, maybe you can remove the loan contingency. I would never recommend to my client as a buyer to fully remove the inspection contingency unless their reports were done way in advance and you knew everything about that house, but maybe you can shorten or adjust it a little bit.
Here’s another one. If you have to write a contingency of purchase (in other words, you’ve got to sell your house in order to purchase this new one), make sure that your present home is in escrow. If you don’t, most sellers are not going to give you a second look.
Here’s a few more things to make your offer really clean and shiny.
Increase the earnest money deposit to 3% of the purchase price. If you come in with a low earnest money deposit, most sellers are going to say, “That doesn’t look too good.”
Increase your down payment. If you’ve got the extra cash, a strong down payment makes the seller feel much better about you. If you come in with a low down payment, your offer is probably going to go to the end of the line.
Shorten the escrow period. If you can shorten it up to 30 days instead of 45, sometimes sellers really like that.
Don’t ask for closing costs or a seller credit. If you’re in a sellers market and you do that, the seller is probably not going to accept your offer over others that are not asking for a seller credit. So try and make your offer as clean and shiny as possible.
Here’s two bonus ones that most people don’t know about.
In California, you can no longer write a buyer’s letter anymore. Don’t ask me why…welcome to California. But what you can do is be a living letter, so to speak. When you go to see that house, try and make sure the seller is home and meet them. Make a good impression. Make sure you meet the seller and make them remember who you are, and above all, make a really good impression on them.
Be sure that you’re working with a great local agent that has knowledge, experience and influence. I’m talking influence within that local area that you’re looking in. Many times because I had a relationship with the listing agent who knew me and that I was going to get this all the way to the finish line, they felt like they could trust me to ensure that this transaction was going to be successful. So find a great local agent that has influence and a stellar reputation in working with other agents in that local area. It may just put you on the inside track in buying your dream home.