Wit historically low interest rates and with a possibility of them creeping up in the future you have decided to jump in and buy your first home, trade up to a bigger one, move out of that apartment and want a backyard. But you have heard stories of multiple bids and some losing out over and over with disappointment. But what you need to know is the market is always changing and values of homes are determined by the negotiated price and terms between buyer and seller in a given moment of time, and my experience knows you will find the right home.
Yes, it’s a sellers’ market, real estate has cycles and now the mortgage rates are too great to pass up. COVID-19 played a big part in the low inventory but new protocols to keep all safe have been implemented and inventory will build so get ready for spring and get your ducks in order.
Buying a home in a sellers’ market or any market for that matter is the biggest investment purchase you will make and it's more than just money. A sellers’ market requires diligence, focus and since homes are priced to sell, you need to know what you want, how much you can spend and what things aren't negotiable. Make the list of requirements and desires, get your finances in order and work with a skilled professional realtor. Start online and researching the community you have chosen to live in or trade up in. Get pre-approved for a mortgage (I have a mortgage VP in mind who are outstanding).
You have seen the home you want to purchase, but also think about other homes too as backups. Make the most of your time by obtaining information about the house you're interested in. Look for any disclosures on the property, property reports and how long you have to make an offer.
Sellers and their agents want your offer to be complete with full documents in the offer package nothing should be missing. When you know you’re in a bidding war get answers to many questions. What's the deadline to submit final offers? Review with your realtor what's important to the seller. The realtor will get as much intel as possible to help you prepare your offer. What's the best closing date, does seller want quick closing or a delayed one, does seller need to find another home and wants a lease back. Are there other factors like inspections “as Is” condition? Financing and terms and time line or an all-cash no financing contingency?
Make sure these questions are asked and answered and it is something you can live with. You need to determine your risk level, if not it’s a good way your offer will be rejected.
The day has come it’s the final presentation for offers know your limit. You need to have your offer stream lined contract package that includes cover letter to seller well written and sincere. Pre-approval of mortgage or best if offer is cash and you show proof of funds if you have it, you can finance later after you close on the property. Check to see if you can increase down payment up front, review sellers disclosure, lead paint disclosure if applicable, fully execute contract. Think about removing some contingencies but there are risks, remove the appraisal of the home if there is financing, consider the home inspection for information only. However, you need an inspection for environmental, mechanical, and major structures.
Other things that may help:
- Offer to pay sellers transfer fee, or closing fees or attorney fee.
- Tighten up all the time lines if inspection is 14 days from attorney review shorten to 5.
- Your offer price should stand out. Make it memorable. Most offers are in round numbers so go your distance and then if it does not work out move on to the next one. It will all work out and I know it will.
- Sweeten the pot where ever you can but don’t lose sight of your limits.
- Don’t be afraid to walk away either. Or get upset there will be a home for you.
- Remember the mortgage rates are low. For every $1000.00 at 3.025% equals $4.32 cents per month, that’s equivalent to a STARBUCKS GRANDE LATTE.
Just know,whether you are the winning bid or not you have done the best you can and be proud that you have gone the distance and keeping your head in the game and not losing sight of what’s really important.
Susan Massa Broker Associate
Keller Williams Premier Properties
188 Elm St Westfield NJ 07090