Wow, where did the last couple of months go? I haven’t posted anything here since the end of February? I think the answer to that is the wicked Spring market we’re having – time is flying by! With a busy seller’s market, you encounter multiple offers more often than not. So what do you need to know?
Well, the first thing I tell my clients, is that offers in competition, should not induce panic or emotional decisions. Overpaying for a property, or removing important conditions just to “win” can lead to not only buyer’s remorse, but worse yet financing or inspection issues. You also need to consider how many offers you are up against – that makes a big difference in how it will all play out.
It is true, when you are in competition, you do often lose the opportunity for a typical negotiation. So that dance of “we’ll offer this, the seller will sign back at this, then we’ll hope to end up somewhere in middle” – that’s gone. You need to think about what your best offer is and go in with that. You may not have the chance to go back in and improve on your first offer. So if you are willing to pay $430,000, then offer 430,000, not $425,000, or $427,000, or $429,000. Figure out what that magic number is, and if you get beat out, then you go home with no regret.
Price is not always the deciding factor – one of my own listings this month had 2 offers and the winning bid wasn’t the highest price. You need to look at all the details specified in the listing and make your offer as close to their ideal as possible – consider closing dates, inclusions or exclusions.
Then of course there are the conditions and there are a lot of differing opinions on this. In the super competitive markets, people are going in with no conditions – no financing, no home inspection, and that can carry significant risks. There are a couple of ways around that without putting yourself at risk – by having your finances pre-approved, perhaps you can cut the typical 5 day condition down to 3 days to give your mortgagee time to check the property itself. This can sometimes require an appraisal – especially when dealing with mortgages with less that 20% down.
I rarely, if ever, recommend a purchase without a home inspection – so one way around that is asking the seller if they’ve done a pre-inspection and reviewing the report. Another is paying for your own pre-inspection and bringing an inspector along for your showing – try and get as long a showing as possible. It is money out of pocket up front, but in the long run, the peace of mind is worth it, and you can put a cleaner offer, while still protecting yourself.
It can be overwhelming and frustrating as a buyer in a market like this, but try to keep a level head, and know that there will always be another house!
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