Get Your Offer Accepted In A Competitive Real Estate Market
How do you get your offer accepted in the most competitive real estate market Western New York has ever seen? As a buyer, you’re not the only one trying to figure it out! Many real estate agents are also struggling to help their buyers navigate this market.
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Understanding the Market
Understanding where the competition is coming from can often help your real estate agent guide you as a buyer to determine the right strategies to get your offer accepted. As a Buyer Specialist, I spend a lot of time studying the market so I can help you through this process.
The trend we are seeing in Western New York is a significant increase in BUYERS in the market. These charts show the number of months supply of inventory and the number of new listings each month. Together, these charts demonstrate a clear indication that there are more buyers actively looking to buy a house right now than ever before.
It may feel like there is a shortage of inventory. That is because there are so many buyers looking to purchase, houses are selling quicker than ever before. Meanwhile, each month we are still seeing a similar number of new listings coming on the market. This demonstrates that your competition is due to a larger pool of buyers.
Minimum Requirements For An Offer
In Western New York, all residential real estate offers come with the same basic items making up the overall “terms” of your offer. These are the minimal requirements based on the Purchase Contract used by the Buffalo Niagara Association of REALTORS®.
Many people say that “money talks”. As a general rule of thumb, the highest priced offer will win in a multiple offer situation… Provided all of the other terms don’t come with a bunch of “unusual” requests.
The earnest deposit is considered to be your financial promise to move forward with the contract. As the buyer, if you terminate the contract outside of the legal requirements of the contract, then you could have to forfeit this deposit. More on this topic below…
The timing of a contract can work in your favor when you are able to tailor it to the needs of the seller. These would be the dates provided with your contract for items such as home inspection, mortgage application deadline, mortgage commitment, and closing date.
Cash is king! Well, usually it is anyway… Other than cash, there are several financing options the sellers may take into consideration. From different types of loan products, to third party lenders, to stocks and electronic currency, and even equity lines of credit. Each of these have their own pros and cons. Where the money for the transaction is coming from can ultimately be a deciding factor for the seller when it comes time to accept an offer.
Down Payment and Earnest Deposit often get confused by some people. They are two different things! Down Payment is relating to a loan product and it is the amount that you as a borrower put down towards the purchase price of a house. Then you would finance the balance of the purchase with a mortgage. Sometimes, the amount of your down payment could help influence which offer the seller might choose.
Do you want a home inspection? Sometimes the deciding factor might come down to whether you are asking for a home inspection or not. This is a big decision to make, and one that you should not feel pressured to waive. More on this topic below…
Trying to use only these minimally required items to make your offer competitive can be extremely difficult! Let’s consider some other ways to make your offer stand out to sellers…
Hire An Experienced REALTOR®
Who you work with matters!
When it comes to getting your offer accepted in an extremely competitive real estate market – hiring the right real estate agent is so important! Not only should your agent understand the nuances of the market, they should also be able to build rapport with the listing agent. Communication skills are key when it comes to learning what is most important to the seller about their needs. Your real estate agent will help you to craft an offer based on the needs of the seller. Knowing those needs so you can tailor the best overall terms could be the key to getting your offer accepted! It’s not always about offering the highest price.
Can't I just have the listing agent represent me?
No. The listing agent already has an agency relationship with the seller of the property. Their loyalty and fiduciary duty is to the seller. When you decide to work with the listing agent on a property you have interest in, they will never be able to advocate for you or provide you with the fiduciary duties you are entitled to.
The representation you can get when you “hire the listing agent” is what is called dual agency. This means that you will never get confidentiality nor undivided loyalty. In many cases, the listing agent may even inform you that they represent the seller and they will not represent you, even as a dual agent. Yet, they will gladly write your offer for you so they can also collect additional commission. Do you really want to “hire” the listing agent and have them get paid extra for not being able to fully advocate for you and your interests as a buyer?
Shopping For Your Budget
Properly shopping for your budget could likely be the single most important factor to getting your offer accepted! Since you have already hired the right agent – they have already explained to you what the market looks like, how quickly it can change, and what to expect when making an offer.
Do you understand your budget?
Learning what your budget is could be based on your cash on hand or it would come from having a proper pre-approval from a trusted lender. A lender who has explained all of the fees and costs to you as the buyer. Your total budget is not just about purchase price! It includes all of your out of pocket costs for the loan process, plus any additional costs you may wish to include in your offer on that perfect house! Do you have room in the budget to pay any of the seller’s closing costs? Can you afford to purchase a home warranty? Have you considered paying to cover an appraisal gap?
How much room do you have in your budget?
You should be comfortable with the choices you need to make during the entire home buying process. Often this means shopping for homes currently priced well below your budget. This will provide you plenty of room to offer above asking price. This also allows you the option to cover some additional costs/expenses you may not have already considered. An experienced REALTOR® can help make your offer more appealing to the seller than other offers on the table – and still work within your budget. This starts with shopping in the best price range for your total budget.
Home Inspection Options
Someone told you that you should skip the home inspection to get your offer accepted. Are you actually comfortable with that decision? If you’re not comfortable skipping the home inspection – then you should NEVER feel pressured to do so just to get your offer accepted.
New York is a "buyer beware" state!
Doing a home inspection is your right as a buyer. Under “caveat emptor,” New York courts have ordinarily refused to compensate buyers for home defects found after the purchase unless the seller did something to actively thwart the buyer’s efforts to inspect the property and find all of its defects. By waiving the home inspection, you take on 100% of the risk since you volunteered to forego doing a home inspection.
So what options do you have?
- Request a home inspection and focus on the other terms of your offer to make those strong enough that the inspection is a non-issue to the seller.
- Request a home inspection and add a clause to limit the total cost of repairs that you might request from the seller. (IE: Maximum cost of repair request up to $3,000)
- Write a clause to your offer that the purchase is “as-is” and that you will be doing a home inspection for informational purposes only. Clarify that you will not ask the seller to complete any repairs as a result of the home inspection. At least now you know what potential repairs to expect after you purchase the house.
- Get a home warranty for yourself and offer to cover the seller through closing. This could be done in addition to a home inspection or in lieu of an inspection – whichever you are most comfortable with.
Bottom line – the home inspection decision is one which you should not overlook. You don’t want to have serious regrets if your dream home turns out to be a money-pit!
Make An Earnest Money Deposit
The Earnest Money Deposit is your “promise” to adhere to the terms of the purchase agreement. It tells the seller you are acting in good faith towards completing the sale of the property. This deposit could become compensation to the seller if you terminate the agreement without a valid contractual reason.
Did you know that the earnest money deposit gets applied to your closing costs as the buyer? Since you have already saved up this cash prior to deciding to buy a house, the size of this deposit can show the seller just how serious you are about your purchase. The larger you are willing to make this deposit, the more serious your offer will look to the seller. Go big!
Have A Flexible Transaction Timeline
Now that your agent has built a rapport with the listing agent, they will hopefully have some info about the seller’s needs. If the seller has timing specific needs, your ability to be flexible and work with them could help you win your dream house!
Is the seller under contract already for their next home? Do they need time to finish building a house? Maybe they need to move out fast due to a job transfer? Can you offer to provide a rent-back option to the seller? The more flexible you can be to accommodate the needs of the seller, the more likely they would be to seriously consider your offer.
How can you be flexible for the seller?
A word of caution… You need to fully understand your timing requirements as well. If you are currently renting, make sure you understand your ability to terminate your rental agreement, or to extend it to suit the seller’s needs. If you are looking to finance your purchase, does your lender have any specific timing requirements? Does your lender require you to pay to extend your rate lock? Does your loan product allow for a rent-back option or are your required to owner occupy the house immediately upon closing?
Be Comfortable With Your Choices
As a Buyer Specialist – I see it time and again where a buyer is so disappointed with losing that house because “it’s perfect for them”. Then, the following week, an even better one shows up and they end up winning it instead! I know this is cliché… Everything happens for a reason! Focus on the things you can control and the rest will usually fall into place. Work with your real estate agent to make sure you have the best plan in place to get you there in the shortest amount of time – and still stay within your budget.
If you are not comfortable making certain choices just to get your offer accepted, then maybe it’s not the right house for you. Be patient with the process! If you’re working with a REALTOR® who has helped you understand ALL of your options, then they will want you to be comfortable with every decision you make.
What other ideas have worked for you? Leave a comment below… We would love your feedback!