How do you win in this real estate market? It takes more than learning about homes and how to write up an offer. What’s required is a full preparation. This is because when you find the house you want, you must act forcefully and immediately.
If you read what I wrote in June, you’ll understand why this market is tough for you. Since then it’s gotten tougher.
Large scale NYC rioting has created a near panic to get out. Mortgage rates dropping to historic lows propelled renters off the fence and into home buying. As a result, there are more home buyers while the number of homes has stayed the same. Ouch!
How do you win in this real estate market? You think and act strategically:
- Think like a seller
- Be a solution
- Get Ready
- Move fast
Think Like A Seller
Thinking like a seller determines your strategy. Figuring out what a homeowner is looking for tells you how to approach a seller. So what is a home seller looking for?
- Highest price
- Best terms
Use an escalation clause in multiple offer situations. Actually, use it anyway in case another, higher offer does come in. Escalation clauses protect you from being automatically kicked out when you would have gone anyway. You offer, for example, $100 on a $100 house. Someone comes in at $103 and you lose. With an escalation clause, you’ll go up to $110 (because the house is worth that much to you) in $2 increments. Here you’d get the house for $104. (The seller must show you the other too.) You’re telling the seller that you’ll give them $2 more than anyone else. That’s how a seller sees it.
Some agents advise eliminating inspection and mortgage contingencies. I don’t because this is too dangerous for you. It’s still possible to let a seller feel they have the upper hand while protecting yourself.
Tell them you won’t ask for the first $1,000 in repairs found by the home inspector (structural/environmental issues excepted). My experience is that home buyers don’t ask for minor repairs figuring they can fix it themselves for a lot less. Additionally giving up $1,000 (or more depending on the home) is less than having to go up $3-5,000+ in price.
You can also protect yourself with a home warranty (around $650 for 1 year after closing).
On the mortgage, get fully pre-approved by not 1 but 2 different legitimate banks. Don’t worry. This won’t crash your FICO score. Click this link to learn why. Send in 2 pre-approvals not 1 like everyone else.
Send the homeowner the following with your offer: the name and contact information of your seller, title company and mover. Because listing agents aren’t fond of certain inspectors, don’t name them. Say you have 3 selected and will use the one who’s available on the date needed.
Give the seller a range of moving dates. Let them know you’re ready to move when they are.
Send in a generous initial deposit by check. – use a PDF copy of it – with the rest coming 3 days after acceptance. Prove these funds are on deposit with a PDF of the bank account (account # crossed out). If the transaction falls apart, you get it back so why not? NJ trust account law is extremely strict after all.
How Do You Win In This Real Estate Market?
You win by giving a seller more than everyone else backed up by documented proof. You are reliable, verified peace of mind.
Let’s not forget the value of a buyer’s letter to the seller. Make yourself more than a number on a contract. Get the seller to bond with you emotionally. Letters from buyers can be a determining factor.
Imagine you’re selling your house. You get several offers. One comes in completely prepared with the full down payment upfront, confirming documentation and a beautiful letter from the buyers. Which one would you pick?