Here’s how buyers can win in today’s market
Despite the fact that the real estate market is still favoring sellers, recent data points to a simmering in this red hot market we’ve been experiencing for some time now.
The latest housing data shows us that existing home sales rose 2% in July, which is 1.5% higher than this time last year. Months of supply (housing inventory) improved to 2.6 months, which is the highest level we’ve seen since September of 2020.
Ready to enter the housing market? Here’s everything you need to know about making a smart offer.
A seller’s market means there will be competition for homes that are well priced. While there’s recent data to point to home prices normalizing a bit as the kids go back to school this fall, it’s still a good idea to set a maximum budget and stick to it.
Work with your Realtor to get a realistic understanding of what your budget allows and feel confident in your decision–even if that means losing a few offers. The right home, offered at the right price will come.
Earnest money/due diligence
When making an offer in NC, it is a bit different than in SC. Both states have earnest money amounts to accompany your offers, but in NC that amount may not be as important than when buying in SC.
Because of the way due diligence works in NC….”back in the day” (in a balanced market and not a seller’s market), earnest money amounts needed to be the larger amount and typically averaged about 1% of the offer price. However, in this intense seller’s market, a “flip flop” of sorts has occurred.
In NC, now we are seeing less importance placed on earnest money and more placed on due diligence.
When submitting an offer in NC, you will most likely need a significant amount of due diligence money to win in a multiple offer situation coupled with a shorter due diligence period.
Your Realtor can be instrumental in guiding you through those amounts to give you the best chance in a multiple offer situation.
In SC, the offer is structured differently, so if you use the due diligence option of the contract instead of the Repair Procedure or AS IS option, a termination fee is paid should you terminate as a buyer– in which case, your termination fee should be a stronger amount than typically seen.
And again, your Realtor should have a good pulse on what is going on in the market to offer you suggestions and options for that termination fee amount.
Remember that it isn’t always about the purchase price or due diligence and termination fees.
Beyond an attractive offer, a smart idea is to accommodate the seller’s future plans. A great tactic your Realtor may use is to contact the listing agent first to see what an ideal closing date would be for the sellers.
This could not only help establish rapport with that agent but also shows the buyers aren’t only looking out for themselves. It shows a meeting of the minds and compromise for all parties is the goal!
Knowing an ideal closing date and whether or not a Seller Possession after Closing agreement would be helpful could be the key to structuring a slam dunk offer!
Some feel the quicker the better on a closing date, but that’s not always the case. For example, if the seller is building a home that won’t be ready for 90 days and even that could be delayed, then a closing date 90 days+ would mean thousands of dollars to a seller to save them from moving twice.
Quicker isn’t always better!
Any time inventory is less than the demand for housing, it’s imperative that you are reasonable when it comes to requesting repairs after an inspection.
Avoid asking for cosmetic fixes, and instead focus on these areas:
- HVAC, system should heat and cool properly and timely
- Electrical issues
- Foundation issues
- Properly functioning windows and doors
- Water-related fungus damage
- Reasonable health and/or safety concerns
Related reading: Your full guide to requesting repairs after a home inspection
Beyond making sure you’re pre-approved for a mortgage before you even shop for homes, using a local mortgage lender to obtain a mortgage is actually one of the best things you can do when it comes to having your bid accepted.
A lot of people think that the highest bid is the one the seller automatically chooses— and ultimately there’s a lot more to it than that.
Just like conditions are important to weigh in the decision process–and even more so during this economic climate–sellers will also think about whether or not the prospective buyer has been vetted and truly pre-approved by a local lender.
Just remember that the highest isn’t always the best and the more information your Realtor can gather regarding what is important to the seller is key.
You need to bring your strongest offer in this market, knowing that at the end of the day, you put your best effort forth and would not have offered a dime more towards the sales price, moved one more day on the dates, conceded on one more repair item or put down a penny more of earnest money, due diligence money, or termination fees.
Be aggressive but also be smart and be patient….it will happen for you!