By Ken McCord
This spring, expect to see a torrential downpour of buyers and not enough suitable properties to purchase. While sellers will love it, buyers are going to need all the help they can get. With multiple offers a certainty on the best properties, here is a list of things to consider.
1.) Offer the highest price and have all cash. Yes, “cash is king” works many times. However, recognize cash from an investor or non-occupant is considered weaker than all cash from a buyer who will actually live in the home. All-cash investors don’t hesitate to cancel a purchase contract on a home if they see something shiny on the next street over.
2.) Offer the highest price with no loan or appraisal contingency. Scary to most buyers, as they depend on appraisers to confirm their loan. If you set up the purchase, based on the value you believe is accurate, then the appraisal shouldn’t be far off. Leaving out this variable can make a huge difference in the perception of your offer. If you have overshot the value, you can make up the difference in cash to secure your loan. If you can’t get the loan because you can’t support the difference, you risk losing your deposit.
3.) Offer the highest price with no physical contingency. Unless you are a contractor, this too can be scary. Not knowing whether or not there are costly foundation issues or major termite damage can have a significant impact on value. But if the home is newer, under transferable warranty, or you know the home has been well maintained, it may be worth beating out the other five offers.
4.) Offer the highest price with the shortest contingency periods and the fastest close of escrow. The sooner you can be definite about your purchase and close the deal, the better your purchase offer looks to the seller. Don’t just say you can do it. Show documented proof and arrange phone calls from your loan officer.
5.) Offer the highest price with 20 percent or more down. Anything less than 20 percent down implies a FHA loan and mortgage insurance, which basically implies you are a higher-risk buyer. If you are using FHA and are placing 3.5 percent down, make sure you show strong proof of funds to close the deal. This means you should have 5-10 percent somewhere in your name.
6.) Offer the highest price and impress the seller. If you are looking at a home that is owner- or tenant-occupied, be nice. This is the time to compliment the home and not tear it down. Ask sincere questions about what they like about living there, and let them know when their responses match what you are looking for. Do not ask if the refrigerator or play set is included in the sale. Agents should also mind their manners and represent you best when making appointments, previewing or showing the home.
7.) Offer the highest price and do your homework. Look for permits and ask for inspections and disclosures up front. If the home is unoccupied, investor-owned, or bank-owned, bring a contractor with you. Read any reports carefully. Look for “further investigation” items that will indicate what can’t be seen or assessed by the common inspection.
8.) Offer the highest price, and make sure your agent presents an organized, per-listing-agent-instructions offer. Include a cover letter highlighting key components of the offer and a pre-approval letter. You’ll need proof of funds to close, a copy of an earnest money check, and a legible contract with appropriate boxes checked. A sloppy agent can lose your deal.
9.) Offer the highest price and be the only offer. Timing can make a difference. Once you have lost out on a couple of homes by a day or an hour, you learn to pounce. Looking at a variety of homes and not being afraid to make an offer helps. There is no perfect house, but the sooner you can spot a solid deal, the better chance you have of beating out the competition. You can request a quick response. Standard is three days. Don’t assume a bank-owned seller will respond to this tactic, but private sellers may.
10.) If you can’t offer the highest price offer, do as many of the above as possible. The highest price does not always win. A strong offer, presented by a professional Realtor® from a committed buyer can win the deal many times. It can be hard to lose an offer on a home you wanted, but I am a firm believer that there will be another home that is a better fit for each buyer. Be diligent. Be honest. The real estate world will move your way.