With sales still very strong and inventory low, buyers find the current market more challenging and need some advantages when ready to buy.
When a buyer is running into a situation where the houses, condos or townhouses that they find which look like they could be right for them only to have them go under contract within the first few days, there are some ways to gain an advantage over other buyers.
First would be to have an automated search set up directly in the MLS that sends listings immediately when they come on the market, come back on the market or have a price change. Normally I set these automated listing notifications for clients to send them listings once a day, partly because they don’t want to be getting multiple emails in a day if there are several listings each day that meet their criteria. However, in cases where there are not many properties that meet the criteria or when the client has missed out on something good and don’t mind getting more than one email a day if multiple properties show up each day – it is a smart approach to take to have the automated listing notifications set to be sent out immediately rather than daily.
Next is to have everything needed for making an offer ready so that quick action can be taken when the right property is found. Probably the most important thing to provide in advance is a preapproval letter from a lender or a bank statement when paying cash. Any delay in getting either of these can mean the difference between getting an offer in that will be considered or being too late.
Along this line, having a Loan Commitment Letter is much stronger than having a preapproval or prequalification letter and can also give you an advantage over other buyers who are getting financing. The mortgage broker I work with will provide this but it may take several days to a week to get this done because it requires you sending her your pay stubs, bank statements, tax returns, etc. But this can make a big difference when needed as I will describe below.
There are also other ways to get an advantage when the situation requires it that most other Realtors don’t know about or don’t use correctly. Let me give you an example from just this past week.
Winning in a Multiple Offer Situation (and not the highest offer)
A client I had been working with for about a month finally saw a listing for a house that looked like what they wanted, moreso than anything we had seen so far, and we went to see it the day after it came on the market. When we saw it in person my clients knew it was the right house for them and they wanted to submit an offer. The husband said to me he felt it would probably sell very quickly and might have more than one person try to buy it.
I called the seller’s agent to let her know we’d be submitting an offer and she told me that she already had other agents that told her the same thing and the owners would not be back in town until Monday (it was Friday at that time). She suggested we submit a ‘highest and best’ offer as the owners would review all the offers on Monday and choose one.
Fortunately, my client had already spoken with my recommended mortgage broker and had a Loan Commitment letter. We determined what the house value was (which was higher than the list price) and what the offer price was that we would submit. I then made 2 recommendations for their offer that I felt would give them an advantage over any other buyer who was getting financing and told them that if someone submitted a cash offer near our price that it would probably win out.
We submitted the offer on Sunday morning and on Monday evening we were told that our offer was chosen by the owners. When I spoke with the seller’s agent on a later day and asked her why they chose my client’s offer she gave me some of the details on the other offers and why ours was chosen.
They had a total of 4 offers, 1 cash and 3 (including ours) with financing involved. The cash offer was tempting but it was contingent on the sale of the buyer’s current home and they decided not to go with that since they felt it was riskier than the others. Of the 3 offers with financing only my client’s and one other had conventional financing and so those were the only 2 that were really considered. The other offer with conventional financing actually had a higher offer price than my client’s, but one of the recommendations that I made on what should be included in the offer along with the fact that my client had a Loan Commitment Letter rather than just a preapproval made it a much stronger offer than the other one at the higher price. So we were able to get the contract even without my client paying more than the house was worth because we had other terms in the offer that made it stronger.
There was also one other special technique that I used that gave my client another slight edge over the other buyers and this one is known about and occasionally used by some Realtors but I added my own twist to it. I only use this technique and don’t share it because I want my clients to have the advantage and if the way I do this becomes known and used by a lot of other Realtors, it will no longer be effective.
Don’t think that you should give up or wait because of the conditions of the current market – you can get what you want with a little more work and some clever planning and action.