The Home Hunters Guide to Getting Your Offer Accepted in a Sellers Market
Are you in the market to buy a home in Chicago? If so, you may be wondering how to make your offer stand out from the rest. In this blog post, we will share some tips on how to get your offer accepted. Keep reading for more information!
In today's red hot market, inventory is low and buyers are everywhere. With interest rates at all time lows and property values rising quickly, there are only so many good options for buyers and when a listing goes live, its like vultures on a fresh meal.
With murmurs of interest rates climbing in the near future, many buyers have recently added more fuel to their fires and are becoming more creative in finding ways to secure a home in San Diego before their affordability starts to sink.
So how do you rid yourself of the vultures and how do you write an offer that will sway the seller in your direction? Here are some helpful tips to secure your home purchase and to shorten your hunt for a new home:
Obviously, being the first to view a property is going to be the best tactic and we provide all our clients with the tools to find pre-market and coming soon listings. These off-market, private listings are typically not found on third party search sites. We pride ourselves on being the pioneers of new technology in our industry and try to keep our clients in front of the pack. If you would like to view these listings, you can request access by clicking below.
As-Is Offers & Inspection Waivers
Would you buy a car from a salesman that doesn't know the difference between a V8 and a turbocharged 4 cylinder or can't spot the difference in quality leather or imitation vinyl/pleather? Would you trust a bartender that does't know the difference between a fine wine and a cheap table red? I didn't think so...
It boggles my mind as to how many realtors out there know absolutely nothing about basic construction, building materials and quality of work. I can't fault the realtors but I can fault the system. As a realtor in several states (Illinois, California, Florida and Wisconsin) I can attest to the lack of information learned through state run real estate schools. While we do learn a vast amount of law, agency relationships, changing regulations and contract writing, they do not teach the things that make a great agent great. For example; how to market a listing or your own brand, the general construction of a property, how to conduct showings and open houses or to overcome objections and how to sell.
If your agent can't point out the difference between hardwood floors and engineered wood or doesn't know what tuck-pointing means then you may want to second guess who is walking you through this process. I make it a point to train all my agents on general construction, current codes, new materials and what to look for when it comes to inspection issues and red flags so that there are no surprises which can equate to wasted time and missed opportunities. You can rest assured you'll stay ahead of the curve when you chose to work with a Home Hunters agent.
Appraisal Waivers & Gap Agreements
With property values climbing faster than we've ever seen before, many sellers want to be sure that you can in fact pay the amount of your offer. If this is your first time purchasing a home or you just aren't sure what an appraisal is, I'll sum it up as short and sweet as possible. Lenders loan you the money to purchase your home. However, a lender must protect themselves from as many bad investments as they can. This means not overextending themselves with loan amounts (mortgages) that don't match the properties real value. For example, if I am buying a home for $1.2M, in most cases, it is unlikely that a lender is going to allow me to borrow that amount if the homes real value is only $1.19M.
So what is an appraisal waiver/gap agreement? A waiver is a promise to the seller that the buyer will cover the difference (usually up to a certain dollar amount). Let's use another example here and say that we have found your dream home and you are ready to move in tomorrow. Sounds great right? Not quite... because this lucky seller has 5 other buyers that are also ready to move in tomorrow. Sure, we can offer more than the other buyers but what if your appraisal falls short of what you are offering to pay? A waiver or a gap agreement allows the buyer to determine an amount of a difference that they are willing to cover. In my previous example, a home appraised for $1.19M but the offer was for $1.2M. The appraised value was $10,000 less than the offer. If a waiver or gap agreement was included in the offer for $5,000 then the buyer and seller would move forward at a purchase price of $1.195M. These types of agreements should only be used with a clear understanding of the risks involved and when the buyer has the liquidity to make these types of agreements. Not all buyers are capable of this kind of agreement and it is extremely important to work with a realtor that can accurately assess a homes value in order to minimize any additional costs to their buyer. Understanding the current market and how appraisals work is crucial in this climate so make sure you pick a pro.
Free Rent Back
Some sellers need a little more time to move into their new home. It is very difficult to coordinate two moves in one day. Being flexible and allowing the seller to stay in their home for an additional week or so can sometimes sweeten the deal just enough to get you to the finish line.
While these tips might help, this list is just the tip of the iceberg. A great realtor will have many other tricks up their sleeve including, but not limited to a slew of custom addendums that can be attached to an offer to make yours stand out. We reserve these for our clients eyes only.