Five years ago, when our market was flooded with bank owned properties for sale, the mindset was one of: “what can I get for my client.” Agents constantly asked sellers to make all kinds of concessions:
a) Make an offer below the asking price….market values are still falling!
b) Pay a portion of my buyers’ closing costs
c) Provide my client with a home protection plan, and pay for it.
d) Pay the homeowners association transfer fee for my buyer
e) Appraisal comes in low? Lower the price!
f) Pay for my appraisal
You get the point. Guess what…that market has changed. For the last 6 months I have witnessed the lowest inventory I have ever seen here in my 27 years of selling real estate here in Las Vegas. The game has changed, and the quicker you grasp that the sooner you will be able to secure your dream home. The chart below (provided by the Greater Las Vegas Association of Realtors) is worth a thousand words:
Today multiple offers are the norm and sometimes in a matter of hours or one day. Yet I still see agents wanting sellers to make concessions in an effort to “serve their client.” Want to know the best way to serve your client? Get them the winning bid on the home they really like! It starts with educating home buyers to the climate we are in. Next, as Tony Soprano used to say, you need to have a “sit down” with your client to explain we are not in a market where low ball offers will advance your clients agenda. We previously discussed how to package your client who needs to finance a purchase, and we also discussed earnest money deposits. The next step is to make your offer a clean a possible! How do you do that? Well here are 10 ideas to make your offer on a home you really want competitive:
1) Up the earnest deposit (above what is being asked for)
2) Get real on price! Over the last 6 months we have witnessed about a 10% increase in values. Supply and demand dictates a totally different mindset: don’t be afraid to offer above the asking price.
3) Consider using an “escalation clause” in your offer
4) Want extras? Pay for them….yourself.
5) Think about paying a portion of what would normally be a normal Seller closing cost. Why? Nobody else will.
6) Close in a timely manner. On at least 3 separate occasions over the last 30 days I have received cover letters from selling agents making offers on my listing that expound the virtues of their wonderfully qualified buyer and then go on to ask for a 45-60 day close. If they are so well qualified why will it take 2 months for them to secure financing?
7) Keep the inspection time line short
8) Don’t ask for money for inspection repairs…or at the very least, keep any such requests to a minimum. When the market was flooded with bank properties, banks always had the same viewpoint…you buy “as-is” and they will make no repairs. Why is it that buyers accepted those terms in a down market, yet today they want to the owner of a home receiving 15 offers to make a laundry list of repairs?
9) When presenting offers, show proof of funds for the down payment and closing costs. Show more than necessary if possible.
10) Appraisal: pay for your own and agree to order and pay for it within 2 days of acceptance. Don’t wait to order an appraisal on day 15 of a 30 day escrow. Kick it up one more notch: in the event the appraisal comes in below the price you agreed to pay, offer to pay the difference in cash if you have that ability… but qualify it. Example: Buyer agrees to pay the difference between the sales price and the appraised value up to $5,000.