2020 has been an extraordinary year that will not be forgotten. Home sales in Utah are more competitive than I have seen in my 14 years in the industry.As of the writing of this article, UtahRealEstate.com states that there are 3,974 homes for sale in Utah, but there are currently 9,780 homes under contract/or accepting backup offers!Let’s put that into perspective – there are 2.5 times more houses that are in the process of changing hands than are currently up for sale.
In September, according to UtahRealEstate.com, the average time for a contract to be accepted on the purchase of a home is 11 days! This is a clear definition of a seller’s market.
Play to Win
The second you enter the market as a buyer, you are in a competition. You have a dream that this property fulfills, so you need to be prepared to fight for it. That does not mean you have to lay down and give everything to the seller, but you need to have a game plan and be aware of every situation and how to approach them. Just as the most successful sports teams and athletes are led by coaches who have managed through tough situations to lead their athletes to victory, you also need to plan with and trust your Realtor to lead you through the process of achieving your goal to purchase your new home.
The Playbook
A great Realtor will have a playbook with a variety of options to put into play in order to help their buyers to present an offer that a seller will have a hard time passing up. Perhaps the most important aspect of a winning offer is the preparation prior to seeing potential homes. When I take clients to see homes, I make a point to not only research each home to verify that the asking price is on point, but more importantly, I speak with the seller’s agent to find out as much information about the seller, why they are moving, and their timeframe that they want in order to move out. Of course, just as a winning coach keeps his best plays to be called while on the field, I am not going to divulge my best tactics, but rest assured, when you get the seller’s agent to talk about his clients and the home, you can gather a lot of information that can be crucial to winning the deal!
Game Time
When viewing homes in a seller’s market, a buyer needs to keep the mindset of immediately eliminating the homes they don’t like and prioritizing the homes they do. I have been with buyers who have missed the opportunity to offer on the home they loved simply because they chose to continue shopping instead of acting on the home they love. Keep in mind that if you like the home, other people will most likely like the home as well. If you can see you and your family making memories there, then act on that feeling.
Bottom of the 9th Inning with the Winning Run at the Plate…
Once you make your decision, your Realtor can advise you on how to make your offer rise above the rest. Some of their strategies can include:
Submit a large earnest money deposit and possibly make it non-refundable. It is not uncommon for a sale to fall through and the buyer may need to cancel the contract. This process may take a few weeks and the other interested parties may have disappeared. By showing the seller you are willing to offer the money upfront rather than at closing speaks volumes to how confident you are in closing the deal and that gives the seller peace of mind that their plans to move can proceed without worry.
Present a loan preapproval from your lender. This is different from a pre-qualified letter as the credit worthiness and income verification will have already been completed with the only conditions to cross the finish line being an appraisal.
Give the sellers time to move. You could offer the seller three or 4 days after closing to move out without expecting compensation.
Reduce or waive contingencies. As part of the game plan, your Realtor can work with inspectors and your lender to preschedule appointments to view the property you plan to purchase so that your contingency deadlines can be days away, rather than weeks. One option could also be to waive the appraisal contingency – this can be a risky play and you should speak with your Realtor about the pros and cons of this strategy.
Offer to pay the difference between the sales price and the appraisal. In the event the appraisal comes in lower than the accepted offer price, you could offer to pay the difference up to a certain amount (ex. $5,000) over the appraised value.
Escalation Clause. Your offer could include a well written clause that will increase the contract price over other received offers up to a certain amount. You must make sure the seller has received multiple offers, otherwise they will just counter your offer with the maximum you presented to them. Additionally, the clause must have a way to verify that the seller did receive a bona fide offer higher than your initial amount.
Write a heartfelt letter. A personal relationship can help to sway the negotiations in your direction. Describing to the seller how much you enjoy their home and how you will care for it in the same way will be appreciated. Make sure the letter is sincere and does not feel like you are begging. You will be surprised the impact this can have on a seller.
No additional expenses. In a seller’s market where homes are receiving multiple offers, you will not be competitive if you ask the seller to pay for closing costs, home warranties, HOA transfer fees, etc. Put yourself in the role of the seller, what would you be looking for if the roles were reversed?
Know when to stop. Sometimes the thrill of victory can override the logical part of your brain and cause you to increase price time and again to win. If you find yourself thinking more about the process of making the deal rather than the love you will have for the house…STOP. At this point you need to evaluate whether you just want to win, or if you really want the house at the price you are offering. There will always be more houses that come to the market, it is just a matter of time until you find yours.
Write the offer you would want to accept if you were the seller. Imagine your role is reversed with the seller. Ask yourself what offer you would accept. Now, simply, write that offer. In a seller’s market you do not have the opportunity to low ball the seller – write the offer you would accept!
Welcome Home!
My hope is you now have an idea of how to create and execute a game plan in a multiple offer situation. If you have questions please reach out to me at (801) 885-2558 or by email me at brandonrwood19@gmail.com and let’s create your personal plan.