How to get your offer accepted in a seller's market
Within the past several months, nearly every property I've put an offer in for a buyer has had multiple offers. But we were the winning bid on every single one of them! How did this happen? By using my Buyer's Cheat Sheet and working closely together my clients were armed and ready. In a seller's market with low inventory (hello, southwest Montana) there are a few things a buyer needs to know and have ready at their disposal. So when the right property surfaces...BOOM! We are on it like ducks on a junebug.
It's a crazy market all across the country right now. But as I always tell my clients, someone has to get the property. Why can't it be you?
Here's my cheat sheet for getting a competitive edge:
Know what a seller's market is.
You've heard the terms buyers market and sellers market thrown around, but what do they mean? Here's why it's a seller's market right now:
- Properties are selling quickly at multiple price points
- Many are selling for over list price with multiple offers
- Many properties under contract have a back-up offer in place (sometimes more than one)
- Very few properties come on market within a week's time
Get your paperwork in order.
Buyers have often been tracking homes and the market in general using the internet long before they choose their agent. This is helpful, but unless you take the next step and meet with a lender, you'll be behind the eight ball when you find the perfect home, and there's a good chance not having the right paperwork to accompany an offer can leave you empty handed and out of luck. Meet with a lender (or ask me for local referrals) to get a mortgage pre-approval letter showing your information has been reviewed and you are eligible for a mortgage to purchase the property. Paying all cash? Alert your banker that you'll be needing a proof of funds. I recommend asking them to draft one so it's ready to customize with a property address without much delay. This way the seller, their agent and your agent all know you have skin in the game. Many agents (hello) won't show properties without confirmation you've spoken with a lender in a busy market. It's a waste of everyone's time.
Make a commitment to be ready at a moment's notice.
I'm not suggesting you put life and work aside to devote yourself full-time to finding the perfect home. But, just allotting an afternoon on weekend's or calling multiple listing agents for info on a property will definitely NOT get you the property you want in a low inventory seller's market. When you commit to working with an agent who will get you that home, they are setting aside time in their schedule to meet your needs. When the right property surfaces, be ready to see it as quickly as possible. (Stay tuned for my upcoming Buyer Success Story where we made this happen).
Remove the "if's."
In slower markets (or with clients that haven't been properly coached by their agent), buyers often believe they can rely on contingencies to think things through: I like it but if there's a problem with this or that in the inspection, or I'll move forward if my lender can get me the terms I want...you get the idea, right? they do so only with contingencies. For instance, they’ll buy the home if the inspection goes well or if they can secure financing. But in a seller’s market, it may behoove you to drop one or two of these caveats to stand out to sellers, who generally would prefer as few hurdles on the way to closing as possible.
Your agent should be able to coach you on what contingencies you can leave out and what are crucial, based on your situation.
Understand you are not large and in charge.
Back in the olden days (whenever they were for you) buyers came into negotiations expecting to bargain. "Let's start here (insert low number) to get the ball rolling and see what happens." In a seller's active market, there is often little room for negotiating on price. There are exceptions, when a property is overpriced or has flaws discovered later, but most properties are ending up in multiple bid situations in less than 24-48 hours of going on market (remember my suggestion about being ready to jump?) and often go for well over asking price.
Widen your search.
Not just geographically, but in other ways. Perhaps there's a clogged intersection that people avoid nearby, or some easy updates you could hire a handyman to do that scare away the non-handy buyers. Go to open houses, talk to friends and colleagues (and your trusty agent) about referrals and general costs if you see items cropping up on properties. This will help keep you nimble and ready to jump, as you'll be armed with real information to help with your decision.
Make your agent work.
In a hot market, it's easy to get discouraged or feel like you may overpay for a property. Ask your agent to run comparable research for properties you are interested in. This is researching sold, pending and currently active properties that are similar in style and location. This will give you good solid information on how prices are moving.
When you find a place that fits the bill, you'll both be able to assess it quickly. If they are just showing you properties and waiting for you to decide, find another agent. They should be able to brainstorm different scenarios and options to help you make a clear decision. That's the fun part for me!
Contact me to sign up for my Direct Access Program for buyers and more tips on buying property in Montana, as well as this cheat sheet in PDF form.
Some information for this post provided courtesy of http://realtormag.realtor.org/daily-news/