Tips on how to win in a multiple offer situation

Windowbox
Spring

Yes you can survive a multiple offer situation and be the winner. Be realistic about the value of the home you are making an offer on and understand that sometimes in multiple offer situations the highest offers are below the asking price or maybe at or slightly over. Also know that if it doesn’t work out a better house will come along.

Occasionally I work with buyers who are concerned about the amount of work I have to do to write an offer. That is my job and I am always happy to write an offer even if it seems to be a long shot, so bring it on.

Serious buyers will need to put their best foot forward and make their first offer their best offer in a multiple offer situation because they may not get the chance to negotiate. Often buyers imagine scenarios where they offer X amount and sellers counter at X amount and they end up getting the house for the amount they had in mind. In todays market the seller is calling the shots.

The best offer isn’t always the offer of the most money. Financing is important too. Buyers who are putting more than 5% down may have an advantage. More cash in the mix means that there is a greater chance that the loan will close.

Closing dates matter. Buyer who are inflexible will have less negotiating power. The best strategy is to ask your agent to find out what the sellers have in mind for a closing date. Sellers who need to move into a home that they have an offer on may have to pass on an offer that is 110% of the asking price with a closing in 90 days or maybe the offer is perfect for them.

Flexibility on possession date and time can be important. I have seen situations where sellers need to move out of one home and into another on the same day that they are closing on both the sale of their home and the purchase of another. Not an ideal situation but it happens. Buyers who can allow the seller a little more time to move out can have an advantage in a multiple offer situation that doesn’t cost them a dime.

The amount of the offer is important. I have never seen a lowball offer win in a multiple offer situation. If the home just came on the market today the seller may not be ready to consider a less than full price offer. Buyers sometimes offer less because that is how much they can afford. That strategy mostly isn’t going to work.

When the perfect home comes on the market it may be sold by the weekend, be ready to make an offer now.  Have a pre-approval letter ready. See the home as soon as you can and make an offer or let your agent know you want to make an offer as soon as possible. Sometimes sellers will wait a few hours or even a day for an offer even though they have others if they know the offer is coming and the reason for the delay.

Assuming that the sellers have a lot of money that they can contribute to closing costs is a mistake. Sellers who owe a lot of money on a home may not have the resources to pay the buyers closing costs. An offer that does not require a seller contribution may be more attractive to a seller even though it is for less money.

Do not and I repeat DO NOT skip the inspection – do make your offer inspection contingent. Some buyers are making offers that are not inspection contingent in hopes that the seller will consider it a better offer. Sellers with half a brain should know that the inspection protects them too. Please have a complete home inspection before purchasing a home.

Work with an agent who is prepared and who can quickly write an offer and one with a lot of experience in multiple offer situations.

Seeing it on Zillow doesn’t make it true

House
House – sold a couple of years ago.

Last weekend I got a couple of inquires on homes that are shown as being for sale on Zillow. When I looked into our MLS in both cases the homes had offers on them. The data that is in Zillow is fed from the MLS but until May 1, 2017 agents can by pass the data feed and manually input the listing. There are a few reasons for doing this and to many of us, Zillow is just for fun.

There are homes that are for sale by owners in Zillow that are not really for sale. I talk to the sellers and they tell me they are just kind of trying it out. Rather than putting the listing in the “make me move” category which is for “trying it out”, they go ahead and put it in as for sale by owner.

Most of the homes that are for sale in the area are accurately represented on Zillow. Real estate agents who do not like Zillow avoid looking at the site. I like to take a peak once a week or so. The agents with their faces by the homes for sale are paying for a zip code. In most cases they are not listing the home for sale and sometimes they know almost nothing about it.

Real estate companies and agent teams are getting bigger and bigger and it is all about “lead capture”.

Your agent doesn’t have a clue

Everyone has to start somewhere to get experience. The way real estate agents get experience is by directly working with home buyers and sellers. An agent gets a license and then lets everyone know that he or she is ready to help everyone with the biggest and most expensive purchase or sale that most of us ever make.

It takes 90 hours of training and a passing mark on a test to get a real estate license. New licensees generally don’t know how to write a purchase agreement, or how to be a real estate agent. That is learned on the job. Every licensee is required to work under a broker and the broker is required to provide supervision. Most real estate companies spend a lot of time and money recruiting new agents because the failure rate among new agents is high.

Yet I read questions in Facebook groups and other places written by agents looking for advice and guidance. I am concerned by the questions and by the fact that they are not asking their brokers. Often agents are not aware of what they don’t know and end up learning the hard way.

Real estate agents learn on the job. A new agent will charge just as much as an experienced agent charges, and maybe even more because he or she has start up expenses and a less favorable commission split with the broker. (Agents split their commissions with their broker)

It doesn’t hurt to interview an agent and ask how long he or she has been a full time real estate agent. Agents should have references. A huge part of working with clients is problem solving. That takes some experience.

stairs
Stairs

April is fair housing month

Fair housing is the law of the land yet I have witnessed unfair housing. I have had sellers tell me that they don’t want to sell to “those people”.  . . but they did.

Minnesota has one of the biggest home ownership gaps in the country. Statewide, 77 percent of white households owned their home compared with 39 percent of all households of color owning a home. Housing is part of a bigger picture of financial disparity.

For more information about the fair housing act and other laws visit the HUD portal

Mortgage ready Millennials

Future home buyers

The youngest in the millennial generation will turn 20 thus year and I doubt that many are ready to buy a home. I have had several clients in the last few years who are in their thirties. High student loan debt continues to be an issue because there are limits to how much debt a borrower can have and still get a home loan.

In the long run people who are able to buy their own home are able to accumulate more wealth than those who rent. The first step in getting ready for homeownership is to pay down debt. The second step it to save a little money for a downpayment. There are numerous downpayment assistance programs for credit worthy home buyers.

I like to send people who want to buy a home but who are not quite ready because of student debt or a low credit score to The Minnesota Homeownership Center. The Homeownership center is a non-profit and free.

From the dash board

The screen shot is from the “dash board” in our MLS. I have posted these before. It is a real estate snap shot of the last 7 days. It is pretty easy to see why the inventory of homes on the market is staying so low. The number of homes that have “pended” or have offers on them and are probably going to close is higher than the number of homes that were listed.

MLS dashboard – Saint Paul MN

There are actually fewer than 300 homes on the market in St. Paul that do not have offers on them. This is good news for sellers but maybe not good news for buyers. There are people who are waiting to sell but they won’t until they find a home to buy.

We seem to be in a kind of holding pattern. Most of my clients who are sellers during the last six months have been people who were selling a home or condo that they had been renting out. Often these sellers live out of state, are over 55 and I never actually meet them in person. In every case the home was sold to someone who is living in it rather than renting it out. Usually the desire to sell is triggered by a tenant moving out and owners who do not wish to find a new tenant.