In the current real estate market we are tracking many trends, one major trend is the difficulty that some buyers and Realtors are facing in getting offers accepted. According to the National Association of Realtors, buyers are submitting 6 offers before they’re receiving their first acceptance. That’s a tough position for buyers to be in. This article covers the current market climate and methods that will help buyers secure a home.
The five things that we’re seeing in the market right is that many offers are all cash without financing. Although many buyers may not be in a position to purchase without financing, we are certainly seeing a big uptick in all cash offers. Another thing that we are seeing is extremely high non-refundable deposits. Many offers are made on properties sight unseen. As you may have noticed on the internet there are properties that are in a “Coming Soon” status and some of those properties are under contract before they ever become “Active.” We’re seeing offers that are substantially higher than list price, so you need to know your market and be able to determine what you’re willing to pay for a property. In this market, everyone is acting fast. They’re getting into the properties quickly and they’re submitting written purchase agreements quickly.
The first item on our list is all cash offers. Again, not everyone is in a position to make an all cash offer. If you are not a cash buyer you may want to consult with your realtor and find out if there are any programs available to you that can convert your offer to all cash. This may be a deciding factor in an acceptance and give you a leg up on the competition.
The second item is non-refundable deposits. This is called a “Due Diligence Fee” in North Carolina. We have seen these get up to staggering heights in the recent seller’s market. You need to be careful with this. You need to make sure that you do as much investigation as possible on that property before making the offer. And let’s face it, there’s not a lot of time. You do need to act fast. So, in order to do that, know your neighborhood, know it before you even tour the property. Once you’ve found the right property, then you must be in a position to put your best foot forward and put down as much due diligence as you feel comfortable with.
The third item is “sight unseen” offers. Again, these properties may be in coming soon status. You might see a property hit the internet only to find that before you even get an opportunity to see it yourself, the property is under contract. Sight unseen offers are not right for every buyer. There are many buyers who need to personally tour the interior of the home prior to making an offer. If you fall into this category, then I would not suggest a sight unseen offers.
Your offer price is the fourth item on our list, and it’s a tough one. The best way to determine what your offer price is would be to have your realtor pull the historical data on the subject community and find out what the list price to sales price is. See what other properties have been going in terms of over, under, or at list price. Many times, especially in multiple offer situations, we are seeing offer prices substantially over the list price of the home. When you’re shopping, keep this in mind. If you’re capped at $500,000, then you might not want to look at properties that are listed at $500,000 in a competitive market. You might instead leave some room and instead search form homes up to $450,000. Make sure that you’ve got some buffer in your price range in order to be competitive.
The last item on our list is speed. Act fast. Again, know your neighborhood inside and out. Perform your research ahead of time. When a property hits the market, you need to make that appointment as soon as you possibly can. In many cases, there are no overlapping appointments, which means you might be locked out of a property for 24 to 48 hours. In the meantime, other buyers have an opportunity to make an offer on that home. The second way to act fast is be ready with your offer. Don’t find your dream home only to discover that you have work to do with your lender and with your Realtor in order to prepare an offer.
I wish you the best of success in your house hunting. If you have not already selected a realtor, please consider our office. We’d love to help you with your search!
By TJ Larsen Founder My Townhome & My Maison Realty
MY is a suite of real estate businesses designed to serve our clients through all of their real estate endeavors. From first time home buyers to investors to real estate developers, we have a service group tailored to provide you with results.