It’s a pretty common theme in California’s housing market where you are all ready to pack-up and move into your new home. The only glitch is you could be up to 50 offers in six months and nothing worthwhile has been accepted. So what more can a buyer do in this situation?
You are up against a few major home purchase obstacles:
- The price range you are shopping in is very active with all-cash buyers and fetches multiple offers
- As a buyer using a low down payment program such as the 3.5% FHA or 5% down conventional loan, you are competing with buyers who have stronger financial qualifications.
Sometimes, it is the agent and other times it isn’t.
Here are some effective strategies that should be used:
- Find out if you’re able to be approved with a 10% – 20% down payment conventional program. The reason is because many sellers feel that FHA loans come with more conditions to overcome than a conventional buyer.
- If you’re a patient person you should consider a short sale where there may be less competition for a nice home.
- Low inventory in the area you want? Ask your agent to get in contact with homeowners in your preferred neighborhood whose homes are not listed for sale but may be interested in selling to you now or in the near future.
- If you have been directing your attention exclusively to one neighborhood, see if you can expand your housing requirements and search in adjacent areas.
- Give some thought to buying your home with a co-borrower such as a family member or a trusted friend who can add to the down payment/financial requirements which will strengthen your offer.
- For people who put a higher than average amount into the earnest money deposit, and well before the actual down payment, you are telling the seller that your intentions are serious to consummate your real estate offer. Other competing offers cannot contend with such diligence. Not surprisingly, if you withdrew your offer in the middle or towards the end of the contract date, you’d forfeit this deposit.
- When buying a home in the frenzied environment of multiple offers, try to come up with a connection between you and the seller. The seller having owned or lived in the house a long time may have an emotional experience with it, and you might be able to get on the seller’s side by communicating your appreciation for certain aspect of the home.
- Demonstrate concern for the seller’s circumstance by being flexible on the possession element after closing. Draft an agreement to offer them a 30-60 day window post-closing to allow them to move by paying rent or no rental payment at all. Maintain an advantageous connection by not asking for personal items in the house.
- Sweeten the deal for the seller’s by paying for some of the seller’s costs like settlement, transfer, and title policy fees.
- It does help for your agent to have a friendly relationship with the listing agent and understand what the seller’s truly wants to close the deal. Once uncovered, you can then make an effort to meet those goals.
If you are in a neighborhood where almost all properties are receiving offers over asking price and you really want a house, you may want to make your offer $5000 above asking price, remove the appraisal contingency, and close in 30-45 days. This type of offer, if an FHA or low-down conventional, competes better in a multiple-offer environment with buyers who have a large down payment such as 20-30% or an all cash offer. It suddenly becomes appealing.
If you carefully consider and implement these strategies, you will certainly be a leg up on the competition.