By MICHAEL EDLEN | Special to the Palisadian-Post
There is still a serious shortage of homes available in most price ranges of our highly desirable neighborhoods. We continue to see some all-cash buyers, people coming with investment capital from overseas and all-cash investors still on the hunt for suitable properties.
What does a buyer need to do in order to increase their odds of succeeding in such a difficult market environment? There are several actions that can significantly increase the probability of success.
Become educated about the current housing market conditions and recent trends.
Become familiar with the current inventory and prices. Compare properties with properties that sold over the past several months that might have been suitable to meet your needs. Be aware of the average prices per square foot and the price increase percentage over the past year in your preferred area.
Be sure to engage a seasoned buyer specialist who has successfully represented at least several buyers in the last two years. Be vigilant and diligent in doing your own searching. A home-seeker will sometimes notice an opportunity or option that their agent may not have considered suitable.
Be sure your agent finds out as much as possible what the seller’s agent and the seller themselves would prefer in an offer. Then have your offer written as closely as possible to the seller’s specifications.
Unless you are an all-cash buyer, it is crucial to be pre-approved by a well-known lender. This process will involve the lender verifying your credit score, income, debts and employment. The result is not merely a pre-qualification. Rather, with pre-approved financing both buyer and seller can have much higher confidence that financing will not be an issue in the transaction.
Be willing to help your agent write as “air-tight” an offer as you are comfortable with, including short contingency periods and minimal requests of the seller. Consider writing a personal letter and perhaps provide a family photo to accompany an offer. If you write a letter, be watchful not to go overboard in emotional appeal or personal elements that sometimes can backfire.
Be prepared to make a quick and committed decision if necessary, especially if multiple counter offers are issued by the seller, which may increase the price. Be prepared for the possibility that the price may be difficult for an appraiser to justify, in which case a buyer may need to make a larger down payment.
If there is not a rush to present an offer, consider performing property inspections before you write. This can work to your benefit if you think the property may have multiple offers, because you would be able to remove contingencies quicker, which will make your offer much more appealing.
Consider improving the strength of your offer by offering to pay the seller a certain amount per day if there are any delays in closing on time. This could include reimbursement of all seller carrying costs for their own loan interest, property tax and insurance costs.
Consider offering to pay some of the costs that sellers typically would have, such as retrofitting, escrow fees, title insurance, etc.
There are a few cautionary points/mistakes as well:
Do not assume that the seller will always issue a counter offer to everyone who has presented an offer. At times an offer may be so clean and solid that the seller will simply decide to accept it or only issue a counter offer to that party.
Make every effort to maintain as clear a perspective of the “big picture” so you are not distracted or over-influenced by relatively minor issues. For example, major cosmetic repairs needed might amount to thousands of dollars, but are very little as a percentage of the total purchase.
Similarly, if a home does not meet all of your criteria and if you would not rank it a 10 on a scale from one to 10, compromise is usually called for. You may discover that eight out of 10 is as good as it gets.
Give your agent a chance to perform satisfactorily and do not hold him or her responsible for a shortage of inventory or unavoidable multiple offers. Loyalty to an agent is usually warranted unless the agent shows little understanding of your key criteria or fails more than once to identify an alternative that you definitely feel would have worked well for you.
Michael Edlen provides real estate counseling services to prospective buyers and sellers and has closed more than 1,300 sales. More tips and information are available at michaeledlen.com. He can be reached at 310-230-7373 or firstname.lastname@example.org.