The current climate of the local real estate market is crazy! There is a frenzy with buyers far exceeding the supply of available homes. It seems every new house hitting the market has immediate and multiple showings resulting in several competing bids. Buyers are getting desperate after losing out on four, five, and six properties.
Desperation often leads to bad decisions, so I’ve developed a quick list of "dos and don'ts" to help get offers accepted while protecting buyers from doing something that is truly detrimental.
DO: FIGURE OUT WHAT YOU CAN AFFORD BEFORE BIDDING
At the end of the day, price is what matters most, so you should have a good idea of what your upper limit is. You should also consider what you will need to spend on necessary repairs, because it may be difficult to negotiate repairs from the building inspections. Once you know what you can spend you can identify properties where your bid will be ultra-competitive.
DON’T: WAIVE YOUR BUILDING INSPECTION CONTINGENCY
Many buyers think they can look at a house and determine there are no major flaws. This is unwise. Most major flaws are not obvious to the untrained eye (otherwise an owner would have likely fixed it!). It is okay to agree not to ask the Seller to make any repairs, but you should retain your ability to walk away if your inspection shows significant work beyond your expectations and budget.
DO: HAVE YOUR PROFESSIONALS LINED UP
It is helpful if you can show a seller you are ready to move fast. It is a good idea to have your mortgage financing underway with a pre-approval or conditional approval in hand, and your inspector and attorney identified and ready to go. If you can tighten up your timelines, your offer may be more attractive.
DO: PROVIDE THE SELLER SOME FLEXIBILITY ON A CLOSING DATE
This may not always be possible depending on your situation; but, in this market, many sellers are nervous about finding their next residence. If you can provide some flexibility on closing, it will make your offer stronger.
AND FINALLY, A BIG MAYBE: WHAT TO DO ABOUT MORTGAGE AND APPRAISAL CONTINGENCIES?
There is no easy advice here. Making an offer without a financing or appraisal contingency puts a prospective buyer on much stronger ground. Waiving these protections come with some significant risks. Before making an offer without these contingencies, it is worth having a conversation with your attorney to make sure you understand how the contingencies work and what the implications are.