Multiple Offers are Killing Me!4/14/2021
If you are in the market to buy a house right now, you know that many homes are ending up with multiple offers and your offer is in competition with all of them. Why is that? Because we have more people who want to buy than we have houses to sell (hint: if you want to sell, now is a great time!).
Robin and I recently had a house listed that, frankly, in a normal market might not have stood out. It was a house in disrepair and needed a lot of work. That didn't stop 64 agents from showing that home in 24 hours, resulting in 20 offers with 1/3 of them being cash. The winning offer was substantially above asking price, all cash, with no inspection, and no appraisal. This is not unusual in this market, but it can be incredibly frustrating to buyers who put offer after offer on different houses, and never get accepted.
I don't say any of this to discourage potential buyers, but to help to educate you on the buying process with some tips on how to get the home you want, without doing anything crazy to get it. If you are not a contractor/house flipper I DO NOT RECOMMEND BUYING ANY HOUSE WITHOUT AN INSPECTION AND APPRASIAL.
Here are some Tips:
1) Look for homes that meet your criteria that have been on the market for a little while. In this market, people automatically assume if it has been on the market more than 14 days there is something wrong with the house. But there are many reasons why a house stays on the market. Check with me and I can let you know if the house has been Pending and the deal fell through due to financing (that is the case much of the time). Unfortunately, once a house has gone Pending and then goes back on the market, some people don't want to see it anymore. But that is good news for you!
2) Look for homes that need a little TLC. While we advise all Sellers to make sure their homes are in good condition before they sell, some do not follow that advice. A home that needs paint, or has a fence ready to fall over, or has other issues that are easy and relatively inexpensive to fix, often sit on the market longer. If you are willing to do a little work, or pay someone else to do it, go for it!
3) Consider new construction. There is no real competition from other buyers with new construction, and often, the base price is already set. If you are willing to wait six months (or more) this can be a great way to go. Contact me and I can tell you who is building in your preferred area.
4) Include as few contingencies as possible in your offer. While I always recommend getting an inspection and appraisal, there are additional contingencies that you would be advised to skip unless absolutely necessary. If you have to sell your present home before buying, ask your lender about a bridge loan or other financing tool that will keep you from having to include this as a contingency. This is a real deal-killer in this market.
5) Include a larger-than-usual Earnest Money Check. I usually recommend Earnest Money that is approximately 1% of the purchase price. In this market, consider writing that check for 2-3% to stand out from other buyers. If the deal falls through and you are not at fault, you receive this money back.
6) Offer a shorter-than-usual Inspection Period. In Central Kentucky, we usually include a 14 day Inspection period. Offer to do your inspection in 7 days, but before you do it, contact your inspector and make sure he/she is able to do it within that time frame. I can give you a list of inspectors to call.
7) In certain circumstances, offer above asking price. This is not something I usually recommend, but in this market, if you find the perfect house you have been looking for, it might be worth it. Here are some caveats:
1. If you are getting a loan, the home is going to have to appraise for the purchase price. If the home appraises for less than purchase price, you need to have enough cash on hand to make up the difference. For instance, if you offer $250,000 and the house appraises for $240,000, you will need $10,000 on hand to make up the difference. In a normal market this might be negotiated with the Seller, but that is most likely not going to happen in our current market.2. Don't offer above asking if you are not going to stay in the home for several years. If you are going to stay there a relatively short time the value of the home might not have caught up to what you paid for it and you end up "upside-down" on your mortgage. That will put you in a situation you do not want to be in.????
I hope that these Tips are helpful. Please call or text me at: 859-351-5733 if you have any questions.