Pre-Contract Home Inspection, Crafting a Competitive Offer in a Seller’s Market
Home Buyer Tips in a Seller’s Market
A home buyer does not want to get caught off guard in a seller’s market. In the blink of an eye their dream home could be gone. When the market changes to a seller’s market, a buyer’s strategy needs to change. In a seller’s market, the same techniques practiced in a buyer’s market are usually unsuccessful. That is why one of the smartest things a buyer can do is find, listen to, and trust, the advice of their real estate team. That includes the realtor, home inspector, loan officer, and title company.
What is a Seller’s Market?
In a seller’s market time is of the essence. Multiple offers happen with more regularity because, by its very nature, a seller’s market is defined in part by low inventory and a lot of home buyers. Home’s often go under contract over list price within days, if not hours of being on the market. So how do you create that competitive offer while still feeling confident you are making a smart decision?
Crafting a Competitive Offer
Because most home buyers have very little interest in the real estate market when they are not buying a home, they aren’t always aware of current market conditions. Commonwealth Home Services reached out to some top local industry professionals to help buyer’s craft the most competitive offer in a seller’s market in hopes of snagging that dream home.
To win a bidding war, buyers must pay attention not only to the price — the highest bid doesn’t always win — but also to terms of the offer. According to Jen Powell of The Powell Team at Keller Williams Realty, she recommends an escalation clause. This allows the buyer to offer their desired price, but also indicates that if another offer comes in they are willing to go $1,000 over the next highest offer, capping at a set number. This allows the buyer to be competitive if other offers are better, but protects you from paying over your price cap and from paying more if there are no other higher offers. Jen also suggests putting down as much earnest money as possible. The larger the deposit the more serious a buyer looks. If the offer is accepted, that money goes towards closing costs. If the offer is not accepted, or if the offer falls through due to inspection findings, HOA review, or appraisal, the money is returned to the buyer without penalty.
Jen does not advise her clients waive the home inspection. There are two options available, both include having a full home inspection where you spend a few hours in the home learning everything you need to know. One allows you to ask the seller for fixes and one states that you will make the fixes yourself, or have the option to back out of the contract. The one stating you will do the repairs yourself can make your offer stronger while still giving you the peace of mind you need. No matter how competitive the market, this is a major financial decision and the safety and health of your family is more important than anything. If you are concerned about leaving the inspection contingency in the offer, a pre-contract home inspection is another option. A pre-contract home inspection ensures a potential buyer is fully aware of the state of the home before they put an offer in so they can make a smart decision, and also allows them to waive the inspection contingency in the offer.
As a personal touch, Jen recommends writing a note to the seller sharing a bit about themselves, what you love about the community, and what your vision is for the future of the home. For most sellers this experience is just as emotional as for a buyer, if not more. This may be the seller’s family home of 50 years. Hearing that someone is going to love and cherish the home as much as they did may be the deciding factor over a very similar offer. Most importantly though, Jen says choose a strong realtor you trust that will go to bat for you and your offer when multiple potential buyers are knocking at the door.
Pre-Contract Home Inspection
A home inspection is a necessary and smart component in the purchase of any home. It provides you with details about the current condition of the home, potential issues, and possible safety and health concerns. During a seller’s market, buyer’s sometimes waive the home inspection contingency to try to make their offer more appealing. Not only do they waive the inspection contingency, but they also offer more money in hopes of having the highest offer, putting them in a risky spot if costly issues arise after owning the property.
A seller’s market is not the time to waive the inspection. By performing a pre-contract home inspection before submitting an offer, the buyer is able to submit the strongest bid possible, waive the inspection contingency, and still have peace of mind about the condition of the home. Spending a few hundred dollars up front for an inspection could potentially save you thousands in the long run. Contact Commonwealth Home Services to schedule a pre-contract home inspection today!
Picking the Right Lender
Arguably one of the biggest investments of your life, how do you know which lender is right for you? Given the competitive nature of the Washington DC metro real estate market, using a local lender tends to be looked at more favorably when multiple buyers are vying for the same property. According to Scott Silverstein of Caliber Home Loans, local lenders who specialize in residential mortgages tend to be more accountable, flexible, and responsive when home offers need to be put together quickly and processed even faster over big bank chains. Lender availability is paramount in a competitive market, day and night. Buyers should expect to speak with their lender when they need to, and know exactly what their interest rate and monthly payment will be. There are many moving parts to mortgage loan approval. As a local lender Scott’s goal is to make sure your process is seamless from start to finish.
Closing
Not all title companies are created equal…or charge the same rates. Mike Madigan from Allied Title & Escrow, LLC says establishing a great relationship with a title company may get you a discount off closing and the flexibility to close anywhere, anytime. A good title company should be proactive and responsive, not reactive. Allied Title & Escrow understands that many buyers and sellers aren’t familiar with the title insurance / closing process and are happy to be available to answer every question, keeping everyone in the loop at all times throughout the transaction.
Now that you have a few tips on how to snag that dream home in a seller’s market, contact Commonwealth Home Services today to put together the perfect team and close the deal!
