So you’ve been searching for that perfect house to call a ‘home’ and you finally found one! The price is right, and in such a competitive market you want to make sure you make a good offer so that you can guarantee your dream of making this house yours comes true!
Freddie Mac covered “4 Tips for Making an Offer” in their latest Executive Perspective.Here are the 4 Tips they covered along with some additional information for your consideration:
1. Understand How Much You Can Afford
“While it's not nearly as fun as house hunting, fully understanding your finances is critical in making an offer.”
This ‘tip’ or ‘step’ really should take place before you start your home search process.
As I have mentioned before, getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and will allow you to make your offer with the confidence of knowing that you have already been approved for a mortgage for that amount. You will also need to know if you are prepared to make any repairs that may need to be made to the house (ex: new roof, new furnace).
2. Act Fast
“Even though there are fewer investors, the inventory of homes for sale is also low and competition for housing continues to heat up in many parts of the country.”
According to the latest Existing Home Sales Report, the inventory of homes for sale is currently at a 4.7-month supply. Jacksonville is on fire compared to most of the country with an absorption rate 3.4 months, as you can see below.
This is well below the 6-month supply that is needed for a ‘normal’ market. Buyer demand has continued to outpace the supply of homes for sale, causing buyers to compete with each other for their dream home.
If you think that you can wait it out, it won't work either. We have been like this for years, and we are seeing an appreciation rate of $1580 a month on properties in the $175K range, and it's even more as the price point increases. Please call and ask for more information for your particular situation.
This essentially means that if you wait out the market, you could be completely priced out of the market if you are on a budget, as most of us are today. I've seen people who started looking a year ago with a max cap. They didn't want to compete with other bidders and go above market, and now there is absolutely nothing they want to purchase because the inventory at their price point is not as nice as when they first started to look at homes.
Please don't let this happen to you. If you find something that you love, then you have to be competitive because someone else will go ahead and take the home for their gain.
3. Make a Solid Offer
Freddie Mac offers this advice to help make your offer the strongest it can be:
“Your strongest offer will be comparable with other sales and listings in the neighborhood. A licensed real estate agent active in the neighborhoods you are considering will be instrumental in helping you put in a solid offer based on their experience and other key considerations such as recent sales of similar homes, the condition of the house and what you can afford.”
Before we make an offer, I will go through all of the sales in that area over recent history. I will look at every picture that is available and find the homes that are exactly like the home that you want to purchase, and I will take that data and create a Comparative Market Analysis (CMA) for you that helps you determine the best price possible to become the owner and save money in the process.
For instance, I can help you make the seller pay your closing costs, I can ensure the home is repaired to our standards, and I can even help convey personal property over to you upon closing.
Did you like that washer, dryer, stove, and refrigerator? It's yours.
These items are very difficult to do when you do the process alone, and the seller may end up slipping in clauses in the contracts that make you pay, not only your closing costs, but their closing costs as well.
Do you know how to read a Settlement Statement? The title company that works for the seller does, and they will put charges wherever their client tells them to put them. It is imperative to have a representative on your side to ensure compliance and accountability.
They can also trick you into accepting the home "as is where is", and they may even have a nonrefundable deposit clause that someone that didn't study law in college would probably miss.Therefore, if you figure out that they are essentially robbing you because they know they can, they keep the deposit and do the same game with the next victim. I've seen flippers make a living on collecting deposits. It's unethical; however, real estate requires caveat emptor (buyer is responsible for determining quality).
Luckily, you have me at your disposal, and I have studied law, finance, economics, and accounting in college, but more importantly, I have dealt with each of these areas in real estate for the past 13 years. I've seen it all at this point, and problems that come up today are reiterations of my past successes, and we will win it this time as well.
4. Be Prepared to Negotiate
“It's likely that you'll get at least one counteroffer from the sellers so be prepared. The two things most likely to be negotiated are the selling price and closing date. Given that, you'll be glad you did your homework first to understand how much you can afford.
Your agent will also be key in the negotiation process, giving you guidance on the counteroffer and making sure that the agreed-to contract terms are met.”
If your offer is approved, Freddie Mac urges you to “always get an independent home inspection, so you know the true condition of the home. If the inspection uncovers undisclosed problems or issues, you can typically re-negotiate the terms or cancel the contract.”
I can help you with this process, and you will have an insurable home when I hand you the keys when you work with me.
Bottom Line
Whether buying your first home or your fifth, reach out to me today, so I can be your confidant and advocate. You will buy your dream home on your terms, and you will save several thousand dollars in the process. My minimum benefit to my client on each deal that I have done over the years is over $7,000 of enrichment per client. I even have a recent case where I made my client $138,000. Every situation is different, so call me today.
