Here it is, mid-March, just at the beginning of the ‘Spring Selling Season’ for residential properties, and we’ve already begun to experience a high number of multiple offers received on homes listed for sale in the greater Portland metro area. Yes, ever since last spring, many owners have received more than one offer on their home, but it’s been just in the past couple of weeks are we seeing 10+ offers submitted on well-priced homes. Recently, several buyers lost out on a home that received multiple offers, with the accepted offer being $10k, $39k or even ‘over $50k’ over the published list price.
The multiple offers and price appreciation are starting quickly this year, so it makes me wonder what the rest of the spring and summer real estate market will bring and how best to prepare my buyers for what to expect.
Here are some things Buyers can do to be ultra-prepared for this hyper competitive market.
1. Be Prepared Financially – Talk your lender before you begin looking at homes. You’ll want to keep updated with the lender to understand the financial impact should you need to raise the upper end of your preferred price point. How will increasing the sale price affect the amount needed for earnest money, down payment, and on-going monthly mortgage payments? Don’t wait until you see the perfect home on a Saturday, wanting to write an offer, and hoping that you will still be eligible – and comfortable – with higher figures.
2. Have a Pre-Approval Letter - Ensure your lender is available to provide a pre-approval letter to submit with your offer. If possible, have the lender obtain full underwriting approval on you and make the financing only subject to the property qualifying. Some lenders offer an added benefit of ‘guaranteed on-time closing’ which is an attractive feature for sellers as it ensures there won’t be any unnecessary delays in completing the sale due to lender processes.
3. Set Your Expectations – I’ve begun to mention to my buyers in our initial conversations that finding the right home will require patience and that it may take submitting 2, 3 or even 7 – 8 offers on various homes before a seller accepts their offer. If an offer is not chosen, just check one off the countdown and move on. There will be another home that will be just as good – possibly better – that will become available.
4. Make a Good Impression – if you attend an open house, introduce yourself and let the agent know you are working with a Realtor. Avoid bring pets/strollers/etc. inside, without first asking. Don’t sit on the furniture. Watch what you say during your time inside the home – don’t point out issues with the home, needed updates, unique furnishings – with today’s abundance of electronic devices in homes, you never know what information will get back to the seller.
5. Make Your Offer Stand Out – While sale price is one factor to make an attractive offer, it isn’t the only thing sellers look for when reviewing multiple offers. Other key factors include the amount of earnest money and down payment, limited risks (inspections/repairs, appraisals*), additional possession for the seller after the close date, and your commitment to perform (i.e. you won’t be pulling out due to having to make a hasty decision). Consider including terms such as putting a cap on any inspection repairs requested, offering to pay for a home warranty that covers both the seller and the buyer, or offering the seller possession after close – possibly free of rent back for a period of time.
6. Write a Clean, Uncomplicated Offer – neatness counts. The offer should be legible, all boxes completed, clearly understandable terms, all spaces initialed or signed as needed. Prevent the need for the Seller’s agent to follow up with clarifying questions or counter offers. Keep the terms simple – don’t include the wicker patio furniture unless it is indicated as being included in the listing information.
7. Include a Letter to the Seller – these often make a difference to sellers, particularly if this is where their family was raised and the sellers have an emotional attachment to the home. Tell the sellers a little about who you are, what you loved most about the property, and how well you will continue to care for it. During your house tour, look for a detail that connects your family with the previous owners and gear a portion of your letter to helping them feel comfortable about you becoming the new owner of the home.
When considering submitting an offer on a home, ask yourself ‘how badly do I want this home.’ Then, if you put your best foot forward and don’t get the home, you can feel great about doing your best.
* Ensure your Realtor informs you of the pros/cons of removing any inspection or appraisal contingency before you include those terms in the offer.