With the sun shining and Spring just a couple short weeks away, the spring market is about to heat up. We’re already starting to see more multiple offer situations and shorter days on market for homes that are priced well.
What does this mean for you?
More buyers are coming out of their winter hibernation and competition is heating up. Sellers and their real estate agents know this and are starting to hold out for offers, especially in desirable locations. By “holding out” we mean that sellers are pricing their homes strategically lower than market value and purposely delaying offers to try to entice multiple offers. They hope this will get buyers in a frenzy and get them a higher than market value offer on their home.
It’s not all bad!
As more buyers come out, people who were previously thinking about selling are taking action and finally putting their homes up. With more houses on the market it is still possible to find your dream home at a great price.
In addition, if you’ve had your eye on a house just outside of your price range for the last month or two, you may be in luck. With a influx of listings, they will likely be advised to consider lowering the price of their home to stay competitive. This means that that home may now be within your price range if you act quickly.
What can you do to put yourself in the best position?
First and foremost, in a seller’s market, you need to be ready to buy. This means that you need to have your pre-approval in place and your money ready to make a purchase (your downpayment is liquid, along with extra cash for closing costs).
You will also need to have your team in place. Make sure you have a real estate agent, mortgage broker, home inspector, and lawyer ready to go so that when you find a place you love, you are ready to move on it. Don’t forget that all of these people are now busier than ever – more clients means they are less able to drop everything at a moment’s notice.
Finally, it is important to know your target market. You need to familiarize yourself with the area you are looking to purchase in, the types of homes for sale and their price points. Your real estate agent can help you with this and may be able to set you up on a custom search. But at the end of the day, as the buyer, only you know exactly which house feels right for you and your situation.
That means you’ll need to pay attention and spend some time each day looking at new houses that come up. You should also be ready to look at homes as soon as they come on the market (perhaps you carve out a few hours one day of the week to look at houses with your agent).
Despite being prepared, you may still find yourself in a multiple-offer situation.
There’s Multiple Offers, Now What?
First off, don’t panic! Your real estate agent has likely been through this many times before and is there to guide you into making a decision that is right for you. During this time, you may also want to call on your mortgage broker, home inspector and lawyer to ensure you can put your best foot forward while still protecting yourself.
Now that we’ve gotten that out of the way, let’s talk about your options.
It’s true that all sellers want to get the most out of their property. And while a higher offer is always attractive, there are other things to consider when making an offer that can tip the scales in your favour (especially if the amount offered is close to a higher offer).
So what else can you do to make your offer stand out?
If you are able to, a cash offer has significant advantages in the eyes of the seller. It allows you to skip any lending or appraisal issues (which can be problem in multiple offer scenarios when offers end up way over asking price). This gives them peace of mind in a simple, easy transaction upon completion of your home inspection.
Usually very important to the seller, having a quick closing date (e.g. 30 days or less) may be just what you need to close the deal. And if you are flexible with your closing date, it’s always a good idea to have your agent find out if the sellers have a particular date in mind that would be most beneficial for them (e.g. when they close on their next house).
Not Conditional on Your House Selling
When in a multiple offer scenario, it becomes a little more difficult to have the condition of selling your home first. If you are able to, consider selling your home before you look for another (or at the very least have yours listed/under contract when you start making offers).
Fewer Conditions and/or a Shorter Conditional Period
An offer with fewer conditions and/or a shorter conditional period may be attractive to home sellers as they can be assured if for some reason you are unable to purchase the home, they can get it back on the market sooner, or go back to some of the other offers sooner (i.e. before potential buyers have had a chance to put offers on other homes).
If you have your team in place and they can move quickly to fulfill conditions, it may be to your advantage to have fewer conditions and/or a shorter conditional period.
Remember, you can always set up a home inspection prior to putting in an offer. This will allow you to waive your inspection contingency, and be more competitive in the eyes of the seller. The seller may be more interested in your offer knowing that you already know all the issues with the home and have still put forth an attractive offer.
You can also choose to waive your financing contingency if you are confident you can find a lender that will finance it and/or are putting in a cash offer. We do caution using this strategy and advise you to speak to your mortgage broker/lender before waiving financing.
Talk to Your Realtor
We get it, it’s stressful to be in a multiple offer situation. But by talking to your Realtor, you can decide which is the right path for you.
Have your realtor call the listing agent to see if any of these options are more attractive to the seller, and put together your best offer with those in mind.
And remember, if for some reason you are not the successful buyer, deals fall apart for a variety of reasons. Have your realtor stay in touch with the listing agent and let them know you are still interested if anything should happen to the deal.
Are you ready to buy? I can help! Contact me and we’ll start the search for your next home!