You’ve decided – you’re ready to find a home, make a home purchase offer, and become a homeowner. The homework has been done, you’ve figured out where you want to live, and have been searching for a home. But there’s one problem – there is a shortage of homes available in your price range and it is an extremely competitive seller’s market.
A seller’s market means that there are more buyers than there are homes available for sale. This is the case for most of the DFW area, and especially for homes under $350,000.
A healthy housing market follows a strong job market. Business is booming in the DFW metroplex. Texas has done an amazing job of attracting corporations to the area. And it’s not just Toyota. Boeing, Kubota Tractor, Liberty Mutual, State Farm, Jacobs Engineering Group, JP Morgan Chase are all bringing jobs to the area. This has led to a shortage of housing in DFW.
The current studies show the tight supply of homes in DFW is not going to improve…for possibly 5 years. Homebuilders are behind the curve in building new homes. And they just aren’t building homes in the most demanded price points (below $400K). Prices are forecast to continue to climb and some economists say that the area is still undervalued! Yikes! The good news is this isn’t Los Angeles prices.
With a strong, dare we say “hot”, seller’s market, it is safe to say you could find yourself in a multiple offer situation that turns into a bidding war for your dream home.
Just this past week a client of mine was up against 41 offers on a property that was priced at $215,000. They didn’t win the house, however they were chosen as a backup. While second place is not where they wanted to be, they still came out ahead of 39 others. They accomplished this by putting their highest and best offer forward and following the tips below.
So what can you do to get the “win” on the home purchase offer you’ve made? These tips might just push your offer to the front of the line.
A Home Purchase Offer that is as Good as Cash
Get fully approved for your financing. Most homebuyers get pre-qualified or pre-approved. Go one step further, provide your lender with all your documentation and have your file submitted for an underwriter’s conditional approval. By doing this you have accomplished several things that could very well be attractive to a seller:
- Confidence of no bad surprises
- Shorter option period
- Shows the seller you are serious
- Removes uncertainty …Gives a level of comfort to the seller and the seller’s agent
Another thing that works fairly successfully is homebuyers keeping it very clean and simple for the sellers by not asking for anything in their home purchase offer. Nothing at all.
- No title policy
- No repairs
- No contingencies
- Certainly, no concessions
Give and you shall receive? Perhaps!
So, give the seller what they want. Offer the seller a lease back. Shorten the option period. If you offer over asking price, make sure you are in the position to pay the difference if the property does not appraise.
Hip Pocket Listings
Work with well-connected agent. With so few listings, getting the scoop on an upcoming listing before it hits the MLS could benefit you. Real estate agents often share information with one another about homes that are “coming soon” to the market. Working with an agent who networks regularly with other agents puts you in a position to possibly get the inside scoop on an upcoming listing.
Third Party Validation
One of the biggest fears sellers have is that the homebuyer will not complete the sales transaction due to a financing challenge. While you should already have your pre-qualification or pre-approval letter in hand, a phone call can make a big difference. Have your lender call the selling agent to attest to your ability to obtain financing and close on time. Of course, your lender cannot and will not divulge any personal financial information, yet they can still give the seller peace of mind by sharing verbally they have reviewed your information, don’t see any challenges, and expect a smooth and on-time closing. Often this phone call can make a difference and your lender should be willing to make the call on your behalf.
Give the seller a temporary lease back – without charging for it. This takes the pressure off of moving and may make your home offer more enticing.
Write a compelling (emotional) letters of why the seller should chose you.
My suggestion for anyone home shopping is if you find a house that is somewhat close to what you want, you should jump on it and present an attractive home purchase offer…before it’s gone!