The spring homebuying season is in full swing. But there is just one problem: The majority of America is reporting a tight supply of residential real estate in most price points of the market.
And no matter how much the demand is there and how much lenders are willing lend, it means little if there are no houses to buy.
As a result, the few houses left and fought over in bidding wars, leaving many borrowers without a house.
Here are a few tips from Minnesota Realtor Craig Kamman to help win a bidding war:
- Offer Full Price or More. Money is a major factor in a seller’s decision, but not the only one.
- Eliminate Seller Paid Closing Costs/Points. It is not full price if you then ask the seller to pay your closing costs. If you need to get the closing costs covered, make sure your offer Nets the seller at least what a full price offer would.
- Large earnest money up front. Show the seller you are committed and putting up risk to stand by your “word” (purchase agreement) to buy the home.
- Cash is King. Go in with cash if possible to eliminate problems of appraisals and financing. Appraisals are a problem as prices are increasing. New regulations make it difficult for appraisers and banks to meet the market changes.
- Closing date should match seller's preferred date. Buyers agent should ask Seller's agent what date the seller would like close on.
- Allow seller a couple extra days possession after closing this gives them time to move out and lowers their stress. (frowned on by attorneys.)
- If buyer is financing, include a statement that the buyer will make up the price difference in cash if the home doesn't appraise out for purchase price. (if buyer can do so) If buyer can’t pay cash, this will also relieve the concern of an appraisal problem.
- If buyer is doing an inspection, have buyer provide a statement that they will not nit-pick any items to re-negotiate price, but only structural or mechanical failures. Inspections were intended to be a way for the buyer to make sure they were not purchasing a major problem. Too often this is now being used as a way to re-negotiate the price with the seller. Remove this potential concern for the seller.
- If buyer is financing, have a well prepared Pre-Approval letter from the lender. Make sure it does not come across as a pre-qualification letter.