Hi everyone. As we have shared over and over….the seller’s market continues in the Kansas City Metro. Great news if you are a seller….you will be getting a great price and won’t be on the market very long. If you are a buyer trying to get under contract, you are going to have to show some hustle.
Buyers, there are things that you can still do that will prepare you and potentially put you at the top of the pile when it is selection time. Some of these things don’t cost any money either. So let’s review these homebuying tips:
Step #1: Financing
A preapproval is just a given in this market. If you can’t write an offer without possession of a preapproval letter, you won’t be a competitive candidate. Even if your offer is strong, your ability to get financing is an unknown to the seller and a risk they don’t need to take in our current market.
Be skeptical if a lender tells you that they can close on your financed loan in an extremely short amount of time (and I’m talking about days). Professionals in our industry understand how long the underwriting process takes and claims of a speedy turnaround are often met with raised eyebrows and concern as opposed to happiness. Most transactions take at least 30 days from contract signing to closing…..45 days is typically a good number to shoot for.
Step #2 Do all you can to avoid being in a multiple offer situation
This is easier said than done these days because if the home is in good condition and priced competitively, it is very challenging to negotiate one on one with the seller. Listing agents know this and don’t be surprised if you hear that they have received multiple offers and they will all be presented to the seller at a specific date and time. Ever wonder how a home listed at $200,000 sells for $204,000? This is how. Multiple offer scenarios drive buyers to bring their best offers in and some of them offer higher than the original list price to be competitive.
How do you avoid being in a multiple offer scenario? There is no way to avoid it 100%, but speed and preparation are key. Preparation is having your financing lined up and it also includes having done some house hunting with your agent. Showings will make you a better educated buyer….seeing what you like….noticing condition issues with other homes….noticing traffic noises or proximity to commercial areas or schools. There is no substitute for gaining this knowledge through showings. Once you have that experience, decisions about whether to move forward with an offer are much easier and come quickly.
Speed is next. When your agent tells you about a new listing (or you find it yourself), do all you can to get there that very day to look at it and get your offer in as soon as you possibly can.
Step #2 Earnest Money
When you write an offer, it is standard to include a check for earnest money. This money is deposited into an escrow account and credited back to the buyer at closing. This signals to the seller that you are “in earnest” and your intention is to perform according to your written contract and make it all the way to the closing table. Some legitimate items might come up that cause you leave the contract (inspection report items that you don’t like, resolution to repair requests can’t be agreed upon, appraisal doesn’t come in high enough and new pricing cannot be agreed upon) without you losing your earnest money and that is fine. The main takeaway, however, is the seller wants to know that the buyer has some skin in the game and won’t walk away from the contract if they find a place they like better.
If you know you are in a multiple offer situation, consider a higher amount on your earnest money to make that point.
Step #3 Closing Date
I know that buyers are anxious to get into the homes as soon as possible, but being flexible on this date might go a long way with the seller. Have your agent ask if the seller’s need some extra time or if they need an ASAP turnaround. Try your best to be accommodating. The fact that you even asked about what works better for them will make you stand out and it won’t cost you a dime.
Step #4 Purchase Price
When your agent pulls comparative sale data from the neighborhood, you will know if the asking price is in the ballpark based on recent sales, the home’s overall condition, age of roof/systems, etc. This along with your own homework of house hunting will make you pretty confident on the offer price.
When the market was a bit more balanced, the back and forth of counter offers could still produce a win-win and there was time to work out a good deal. With the market tilted toward the sellers, that time is no longer available. Buyers need to be ready to make a fair, but strong offer right out of the gate because even if your offer is the first one in, others are not far behind.
Step #5 Be able to look back without regret…win or lose.
It never feels good to miss out on a home you felt strongly enough about to even offer on, but it certainly happens in this climate.
I always try to counsel my clients that you want to be in a position of looking back without regret on the offer. If you your offer is not selected, at least you know that you offered as much as you could and felt comfortable with. On the other hand, if you did get it, we don’t want you scared and nervous because you went too far and put yourself into a hardship. We are wanting to find that middle ground.
I hope this helps you out and, if you have any additional questions, please feel free to reach out to me.
Terry Jackson — Broker Owner — Domicile One Realty Specializing in First Time Homebuyers
www.DomicileOne.com 913-488-5623 Terry@DomicileOne.com