If you are currently trying to buy a home now or in the near future, you may have noticed or heard that it is a very HOT seller’s market right now…in fact, this is the case in many cities across the US.
Why Would This Be??
Well, most buyers simply want to take advantage of the super low interest rates being offered in recent months. While interest rates vary, for people with good credit, we are seeing them get rates of 3% or lower for most of 2020.
Also, because most of America was under some kind of stay-at-home order, they hit the web. If people weren’t shopping on Amazon, they were likely on a real estate website, or two or three real estate websites! The number of visitors to our Hawaii Life website grew like wildfire!
What About All the Unemployment Numbers?
You may be thinking that COVID-19 and the tremendous amount of businesses that were forced to close, and all those workers being furloughed would bring a lot of uncertainty to the market. Back in March when the Coronavirus hit the Country, this was the case.
Here in Hawaii, we experienced about a two-week halt in our real estate market…BUT it resumed with a vengeance and has been exponentially picking up speed ever since.
In my 14+ years of being in real estate, this is by far the craziest seller’s market yet! But buyers, don’t despair…you need to be resilient, have a positive attitude, not take rejection personally, and hope that once you’re an owner and are ready to sell, you will be the recipient of this kind of market.
How to Get YOUR Offer Accepted
In order to be successful in this market, you need to be prepared! Here are some tips to stay competitive and get your offer accepted.
1.Be Aggressive with Your Offer Price
The majority of buyers are submitting offers over the list price…and some by A LOT! You may think you don’t want to give the seller too high an amount initially, but would agree to a higher price if countered. News flash—you are likely not going to be countered if at least two other offers are higher/stronger/better than yours. So give it your “Best and Highest” initially so you won’t have any regrets.
The Demetry’s during their house hunting showings
2. Add in an Appraisal Clause
Nowadays, the result of having a higher sales price is a lower appraisal (unless you are paying cash). The difference between the appraisal value and the agreed upon sales price will have to be covered, either with additional cash from the buyer, the seller lowering their price, or a combination of both. Sellers are now looking for a clause in your offer that says “if the appraisal comes in lower, then the buyer shall bring in cash funds up to a max of $_____”. The higher this appraisal clause amount, the higher your chances of your offer being chosen.
3. Offer to Pay for Customary Seller Expenses
In Hawaii, the seller customarily pays for the condo or association resale document package. Sometimes there are two sets of documents needed for one property, and each normally costs approx. $380 per set. If you offer to pay for this, the seller will net a larger amount if you were their buyer. So why not? An $800 savings to the seller is less than going up in your offer price $1,000. Another seller expense is the termite inspection. It could cost $400-600 in Hawaii, and again if you offer to pay for it, the seller will save money going with your offer. Note—for VA buyers, the buyers are not allowed to pay for the termite inspection. That is a VA non-allowable item.
4. Delete Cleaning of the Property
Of course, buyers want to move into a clean house right after they receive the keys to their new house; however, if you offer to clean for the seller, that makes your offer stronger. For the homes that are owner-occupied, deleting the cleaning saves the sellers a lot of time and stress, or money if they were planning to hire professional cleaners. Note: many vacant properties are professionally cleaned prior to listing the home, so it won’t be too much trouble to sweep or mop before you move in.
5. Write a Cover Letter
When I first started in the business, we agents would customarily write a “cover letter” to the seller sharing a little about who is behind the offer, and what our buyers loved about their property. However, in recent years agents are instructing their buyers to write a personal letter to the seller, adding in photos of the family including of course their pets, trying to pull at the heartstrings of the owners.
In reality, some sellers don’t bother to read the letters because to these people, the only thing that matters is the bottom line of what they will net from the sale. But there are a handful of owners who do take the time to read these letters and have been known to choose an offer based upon a personal connection they feel to the buyers. For some sellers, this is a very emotional time, and they want their home to go to someone who will enjoy it as much as they did, or take care of it as they did. My saying is, “it can’t hurt to write one.”
The Demetry’s taking COVID precautions while house hunting
Good Luck!
Of course, this list is not exhaustive, and these strategies don’t always work. In this market, buyers who can are offering thousands more to the sellers, in order to get selected out of the 10 or 20+ offers a seller may receive. This is just meant to give you the basics of a solid offer, and the reasons why you may want to utilize some of these tips. The other critical step is to get the assistance of an experienced buyer’s agent to represent you in this most important purchase in your life.
For specific questions, don’t hesitate to contact me.
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