Even those who have planned carefully are getting stopped in their tracks by vigorous bidding wars, caused by a shortage of homes for sale, and an influx of all-cash buyers who think they can push aside anyone who needs to borrow money for their purchase.
Many would-be homeowners are left wondering whether a buyer with a decent deposit and a mortgage in-process can even compete?
Don’t lose hope, though. It is possible to buy your dream home, even amidst bidding wars and other buyers waving fistfuls of cash. Most property owners will go for the best money and certainty of the deal.
There are some tricks of the trade that Citygate can share with you to help set you apart.
Be Very Prepared
The most obvious starting point is one that many buyers still ignore — get all your financing ducks-in-a-row and understand how much you can afford, then go house hunting. Work with a good mortgage broker 😊 and let them help you.
At higher price points, real estate agents will want to see proof of funds before showing a property, or a pre-approval letter from a bank or mortgage broker with the loan amount you are eligible for based on your credit, assets and income.
Keep in mind that sellers consider much more than just the bidding price. Indeed, higher bids can be riskier than lower ones. Sellers review what they call associated risk, or potential issues with a buyer’s financing or due diligence requirements regarding inspections and appraisals. Then they choose the deal that is most likely to close.
Get good help
In such a competitive market, enlist the help of the A-Team! Use a good estate agent, a great mortgage broker and an excellent solicitor — even if buying a home without one appears less expensive on paper.
An agent can provide critical market insight and advice, such as perspectives on price-per-square-foot, average days on the market, resale values and a comparison of homes and neighbourhoods. They can also guide buyers through the paperwork-intensive sales process and solve problems that may arise along the way.
Most important, agents have access to properties through their databases and networks. An agent can source things off-market and provide an opportunity before it hits the market. As markets can move fast, a buyer without this industry knowledge could very well miss out on an opportunity or make an expensive mistake.
The power of a smile
Nothing beats a smile and a quick response time to a phone call, text or email. In a hot, fierce market, buyers need to be pleasant and responsive to make sure they don’t lose a property.
As there may be multiple bids, “[the broker of the selling property will] want someone who’s easy to deal with and not so tricky,” said Cuthill of Savills Country Department. If a deal doesn’t close, the seller will have to alter their plans at the last minute — knowing that a buyer does his or her part during the process and will show up at closing is key.
Likewise, buyers should get as much information as they can about the seller. This allows them to structure their offer around the seller’s plans. For example, asking why a seller wants to move can determine whether to offer to close within a few weeks or a few months. Perhaps the seller’s children need to finish out a school year, or someone who’s lived in a house for 30 years needs extra time to move out.
Make it easy
Try to make your offer as uncomplicated as possible. If you’re going to layer your offer with so many conditions and demands, that won’t work. It’s a balance between protecting your interests and doing what you need to do to buy the property.
Even after an offer has been accepted, the deal will likely derail if the buyer requests, say, kitchen and bathroom fixes or replacement of a malfunctioning bathroom Jacuzzi tub. Buyers should instead take the property as is and renovate after the deal has closed.
Don’t complicate the deal — keep it simple and don’t go back on what you’ve said.
For homes needing renovations and repairs, experts suggest making an offer that reflects the fact that the house is in disrepair; make sure you have the funds available so that once the house is yours, you can afford to fix any problems. Only major issues with the home’s foundation or systems found in an inspection can be used to renegotiate or give cause to walk away from a deal.
Pick your battles carefully
Negotiating is part of any property transaction, but in this tough market, buyers have to be careful about which battles to fight — and how long to fight them; there is always a breaking point. Taking the time to hammer out a fair price is important, but don’t sacrifice openness, flexibility or trustworthiness.
In any negotiation, the relationship between seller and buyer has to finish with a win-win feeling for both. Even if the negotiation is tough and difficult, each party needs to be happy about the outcome.
When the seller has a personal connection with the buyer, they may choose that person over another, even if someone else has offered slightly more money or an all-cash deal. Nice people like dealing with nice people!
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