In case you blinked and missed it, by now you probably are well aware our real estate market did a complete 180 degree turn in the past few months and we currently have a true seller's market in metro Denver. All of which is great news for the sellers and a pretty hard pill to swallow for many buyers. If you are a buyer who started looking for a home last fall, chances are by now you have had to raise your budget several times, lose out on a few homes and really adjust your expectations of how far you dollar will stretch in certain neighborhoods. With active home inventory declining by 33% since last January, lowball offers are now a thing of a past with most right-priced listings attracting multiple offers within hours and creating bidding wars. Often the regular buyer is now competing against all-cash/no contingencies offers from investors, which alone makes getting your new home that much harder. So if you are a regular buyer looking to purchase a home through financing and starting to feel discouraged, here are a few tips I currently suggest to my clients when submitting an offer. Of course every situation is different, but my general game plan to increase the chances of getting my buyers' offer accepted is as follows:
1. NO UNREALISTIC LOWBALL STARTING OFFERS ALLOWED. Honestly. If the home you see is something you love, there is no time to waste with an unreasonable offer just to see if there is a "wiggle room." If comps support the asking price, chances are while you're mulling over a way to shave a few thousands off the asking price, the seller is getting strong realistic offers and will completely disregard yours as a joke.Â In some multiple offers situations, the seller will come back to everyone with a request for their highest and best offer, but they don't have to and you really shouldn't count on that. So my number one rule to any serious buyer right now is to always put you best foot forward and fast. Which brings me to my rule #2
2. TIME IS OF THE ESSENCE. Forget the depressed market days of early 2012 when you could "sleep" on your decision to submit an offer for several nights. As much as I dislike pressuring my buyers into a quick decision when it means a 30 year mortgage commitment for them, that is what needs to happen when we see a home they like. Right now I really can't stress the time importance enough to my clients. My partner and I can recall several recent instances when an attractively-priced home came on the market in the morning and was under contract just a few hours later. So act fast, see the listing you are interested in as soon as possible and be prepared to review comps with your agent right then and there if you think this home might be the one!
3. NO UNNECESSARY/DRAWN OUT CONTINGENCIES. Contingencies are in place to protect the buyers and, especially with financing, there is just no way around some of them (like appraisals and loan condition deadlines) unless you are willing to risk losing your earnest money. That being the case, even if you're borrowing there are some ways to make your offer stand out from the competition. My advice (if you have to have contingencies) is to keep your due-diligence period short. Conducting inspections is important, but serous buyers shouldn't risk turning off sellers with drawn out due-diligence periods. In most cases a five to seven day inspection/survey/HOA docs examination period is sufficient and can be accomplished if your agent has the right vendor referrals in place and ready to go for you. Talk to your lender and make sure they feel confident they can close your loan in 30 days. If there is anything your lender requires from you to assure a speedy escrow, quickly get it for them. Also make sure you are working with a Realtor who will actively communicate with your lender and will always promptly submit necessary paperwork. Remember, chances are you might be competing with all-cash 14-day-close investor offers in some cases, so stretching your "in escrow" period pass 30 days is not something I would advise.
4. ENTICE THE SELLER. My 4th suggestion is a curve ball I have used several times in the past few months... When trying to get a leg up on the completion and get your offer noticed, why not offer the seller a higher earnest money amount? A larger than asking earnest money check signals a seller that you mean business and, I'm here to tell you, most sellers like it!
Last, but certainly not least, the most valuable advice I can share with any buyer struggling to find the right home in today's market is to have a go-getter, realistic and honest Realtor working with you from the get-go.
If you have any questions about purchasing a home in today's competitive sellers' market, please don't hesitate to email or call me with any questions; I'm always happy to help!